bhe-20220630

0001081316-22-000025.txt : 20220808 0001081316-22-000025.hdr.sgml : 20220808 20220805181715 ACCESSION NUMBER: 0001081316-22-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 202 CONFORMED PERIOD OF REPORT: 20220630 FILED AS OF DATE: 20220808 DATE AS OF CHANGE: 20220805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE HATHAWAY ENERGY CO CENTRAL INDEX KEY: 0001081316 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC, GAS & SANITARY SERVICES [4900] IRS NUMBER: 942213782 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14881 FILM NUMBER: 221141958 BUSINESS ADDRESS: STREET 1: 666 GRAND AVE CITY: DES MOINES STATE: IA ZIP: 50309-2580 BUSINESS PHONE: 515-242-4300 MAIL ADDRESS: STREET 1: 666 GRAND AVE CITY: DES MOINES STATE: IA ZIP: 50309-2580 FORMER COMPANY: FORMER CONFORMED NAME: MIDAMERICAN ENERGY HOLDINGS CO /NEW/ DATE OF NAME CHANGE: 19990519 FORMER COMPANY: FORMER CONFORMED NAME: MID AMERICAN ENERGY HOLDINGS CO /NEW/ DATE OF NAME CHANGE: 19990308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFICORP /OR/ CENTRAL INDEX KEY: 0000075594 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 930246090 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05152 FILM NUMBER: 221141964 BUSINESS ADDRESS: STREET 1: 825 NE MULTNOMAH STREET 2: SUITE 1900 CITY: PORTLAND STATE: OR ZIP: 97232 BUSINESS PHONE: 888-221-7070 MAIL ADDRESS: STREET 1: 825 NE MULTNOMAH STREET 2: SUITE 1900 CITY: PORTLAND STATE: OR ZIP: 97232 FORMER COMPANY: FORMER CONFORMED NAME: PC/UP&L MERGING CORP DATE OF NAME CHANGE: 19890628 FORMER COMPANY: FORMER CONFORMED NAME: PACIFICORP /ME/ DATE OF NAME CHANGE: 19890628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIERRA PACIFIC POWER CO CENTRAL INDEX KEY: 0000090144 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 880044418 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00508 FILM NUMBER: 221141960 BUSINESS ADDRESS: STREET 1: 6100 NEIL RD STREET 2: P O BOX 10100 CITY: RENO STATE: NV ZIP: 89520-0400 BUSINESS PHONE: 7758344011 MAIL ADDRESS: STREET 1: 6100 NEIL ROAD STREET 2: P.O. BOX 10100 CITY: RENO STATE: NV ZIP: 89520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN ENERGY GAS HOLDINGS, LLC CENTRAL INDEX KEY: 0001603291 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 463639580 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37591 FILM NUMBER: 221141959 BUSINESS ADDRESS: STREET 1: 6603 WEST BROAD STREET CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 804-613-5100 MAIL ADDRESS: STREET 1: 6603 WEST BROAD STREET CITY: RICHMOND STATE: VA ZIP: 23230 FORMER COMPANY: FORMER CONFORMED NAME: DOMINION ENERGY GAS HOLDINGS, LLC DATE OF NAME CHANGE: 20191021 FORMER COMPANY: FORMER CONFORMED NAME: Dominion Energy Gas Holdings, LLC DATE OF NAME CHANGE: 20170517 FORMER COMPANY: FORMER CONFORMED NAME: Dominion Gas Holdings, LLC DATE OF NAME CHANGE: 20140320 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDAMERICAN FUNDING LLC CENTRAL INDEX KEY: 0001098296 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 470819200 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-90553 FILM NUMBER: 221141962 BUSINESS ADDRESS: STREET 1: 666 GRAND AVENUE CITY: DES MOINES STATE: IA ZIP: 50309-2580 BUSINESS PHONE: 515-242-4300 MAIL ADDRESS: STREET 1: 666 GRAND AVENUE CITY: DES MOINES STATE: IA ZIP: 50309-2580 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEVADA POWER CO CENTRAL INDEX KEY: 0000071180 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 880045330 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-52378 FILM NUMBER: 221141961 BUSINESS ADDRESS: STREET 1: 6226 W SAHARA AVE CITY: LAS VEGAS STATE: NV ZIP: 89146 BUSINESS PHONE: 702-402-5000 MAIL ADDRESS: STREET 1: P O BOX 98910 CITY: LAS VEGAS STATE: NV ZIP: 89151 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHERN NEVADA POWER CO DATE OF NAME CHANGE: 19701113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDAMERICAN ENERGY CO CENTRAL INDEX KEY: 0000928576 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 421425214 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-15387 FILM NUMBER: 221141963 BUSINESS ADDRESS: STREET 1: 666 GRAND AVE STREET 2: P O BOX 657 CITY: DES MOINES STATE: IA ZIP: 50306-0657 BUSINESS PHONE: 515-242-4300 MAIL ADDRESS: STREET 1: 666 GRAND AVENUE CITY: DES MOINES STATE: IA ZIP: 50309-2580 10-Q 1 bhe-20220630.htm 6.30.22 FORM 10-Q bhe-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2022

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

For the transition period from ______ to _______

Exact name of registrant as specified in its charter

State or other jurisdiction of incorporation or organization

Commission

Address of principal executive offices

IRS Employer

File Number

Registrant's telephone number, including area code

Identification No.

001-14881

BERKSHIRE HATHAWAY ENERGY COMPANY

94-2213782

(An Iowa Corporation)

666 Grand Avenue

Des Moines, Iowa 50309-2580

515-242-4300

001-05152

PACIFICORP

93-0246090

(An Oregon Corporation)

825 N.E. Multnomah Street, Suite 1900

Portland, Oregon 97232

888-221-7070

333-90553

MIDAMERICAN FUNDING, LLC

47-0819200

(An Iowa Limited Liability Company)

666 Grand Avenue

Des Moines, Iowa 50309-2580

515-242-4300

333-15387

MIDAMERICAN ENERGY COMPANY

42-1425214

(An Iowa Corporation)

666 Grand Avenue

Des Moines, Iowa 50309-2580

515-242-4300

000-52378

NEVADA POWER COMPANY

88-0420104

(A Nevada Corporation)

6226 West Sahara Avenue

Las Vegas, Nevada 89146

702-402-5000

000-00508

SIERRA PACIFIC POWER COMPANY

88-0044418

(A Nevada Corporation)

6100 Neil Road

Reno, Nevada 89511

775-834-4011

001-37591

EASTERN ENERGY GAS HOLDINGS, LLC

46-3639580

(A Virginia Limited Liability Company)

6603 West Broad Street

Richmond, Virginia 23230

804-613-5100

N/A

(Former name or former address, if changed from last report)


Registrant			Securities registered pursuant to Section 12(b) of the Act:
BERKSHIRE HATHAWAY ENERGY COMPANY			None
PACIFICORP			None
MIDAMERICAN FUNDING, LLC			None
MIDAMERICAN ENERGY COMPANY			None
NEVADA POWER COMPANY			None
SIERRA PACIFIC POWER COMPANY			None
EASTERN ENERGY GAS HOLDINGS, LLC			None


Registrant			Name of exchange on which registered:
BERKSHIRE HATHAWAY ENERGY COMPANY			None
PACIFICORP			None
MIDAMERICAN FUNDING, LLC			None
MIDAMERICAN ENERGY COMPANY			None
NEVADA POWER COMPANY			None
SIERRA PACIFIC POWER COMPANY			None
EASTERN ENERGY GAS HOLDINGS, LLC			None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Registrant	Yes	No
BERKSHIRE HATHAWAY ENERGY COMPANY	☒
PACIFICORP	☒
MIDAMERICAN FUNDING, LLC		☒
MIDAMERICAN ENERGY COMPANY	☒
NEVADA POWER COMPANY	☒
SIERRA PACIFIC POWER COMPANY	☒
EASTERN ENERGY GAS HOLDINGS, LLC	☒

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Registrant

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

BERKSHIRE HATHAWAY ENERGY COMPANY

☐

☒

☐

PACIFICORP

☐

☒

☐

MIDAMERICAN FUNDING, LLC

☐

☒

☐

MIDAMERICAN ENERGY COMPANY

☐

☒

☐

NEVADA POWER COMPANY

☐

☒

☐

SIERRA PACIFIC POWER COMPANY

☐

☒

☐

EASTERN ENERGY GAS HOLDINGS, LLC

☐

☒

☐

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

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

Yes ☐ No x

All shares of outstanding common stock of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of August 4, 2022, 75,627,913 shares of common stock, no par value, were outstanding.

All shares of outstanding common stock of PacifiCorp are indirectly owned by Berkshire Hathaway Energy Company. As of August 4, 2022, 357,060,915 shares of common stock, no par value, were outstanding.

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

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

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

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

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

This combined Form 10-Q is separately filed by Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company, Sierra Pacific Power Company and Eastern Energy Gas Holdings, LLC. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes no representation as to information relating to the other companies.

TABLE OF CONTENTS

PART I


Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	173
Item 4.	Controls and Procedures	173

PART II


Item 1.	Legal Proceedings	174
Item 1A.	Risk Factors	176
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	176
Item 3.	Defaults Upon Senior Securities	176
Item 4.	Mine Safety Disclosures	176
Item 5.	Other Information	176
Item 6.	Exhibits	176
Signatures		180

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 3, and Part II - Items 1 through 6, the following terms have the definitions indicated.


Berkshire Hathaway Energy Company and Related Entities
BHE						Berkshire Hathaway Energy Company
Berkshire Hathaway						Berkshire Hathaway Inc.
Berkshire Hathaway Energy or the Company						Berkshire Hathaway Energy Company and its subsidiaries
PacifiCorp						PacifiCorp and its subsidiaries
MidAmerican Funding						MidAmerican Funding, LLC and its subsidiaries
MidAmerican Energy						MidAmerican Energy Company
NV Energy						NV Energy, Inc. and its subsidiaries
Nevada Power						Nevada Power Company and its subsidiaries
Sierra Pacific						Sierra Pacific Power Company and its subsidiaries
Nevada Utilities						Nevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries
Eastern Energy Gas						Eastern Energy Gas Holdings, LLC and its subsidiaries
Registrants						Berkshire Hathaway Energy Company, PacifiCorp and its subsidiaries, MidAmerican Funding, LLC and its subsidiaries, MidAmerican Energy Company, Nevada Power Company and its subsidiaries, Sierra Pacific Power Company and its subsidiaries and Eastern Energy Gas Holdings, LLC and its subsidiaries
Northern Powergrid						Northern Powergrid Holdings Company and its subsidiaries
BHE Pipeline Group						BHE GT&S, LLC, Northern Natural Gas Company and Kern River Gas Transmission Company
BHE GT&S						BHE GT&S, LLC and its subsidiaries
Northern Natural Gas						Northern Natural Gas Company
Kern River						Kern River Gas Transmission Company
BHE Transmission						BHE Canada Holdings Corporation and BHE U.S. Transmission, LLC
BHE Canada						BHE Canada Holdings Corporation and its subsidiaries
AltaLink						AltaLink, L.P.
BHE U.S. Transmission						BHE U.S. Transmission, LLC and its subsidiaries
BHE Renewables						BHE Renewables, LLC and its subsidiaries
HomeServices						HomeServices of America, Inc. and its subsidiaries
Utilities						PacifiCorp and its subsidiaries, MidAmerican Energy Company, Nevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries

EGTS						Eastern Gas Transmission and Storage, Inc.


Certain Industry Terms
2017 Tax Reform						The Tax Cuts and Jobs Act enacted on December 22, 2017, effective January 1, 2018


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




CSAPR						Cross-State Air Pollution Rule
D.C. Circuit						United States Court of Appeals for the District of Columbia Circuit

Dth						Decatherm


EPA						United States Environmental Protection Agency
FERC						Federal Energy Regulatory Commission
FIP						Federal Implementation Plan

GAAP						Accounting principles generally accepted in the United States of America
GEMA						Gas and Electricity Markets Authority

GTA						General Tariff Application
GWh						Gigawatt Hour


IRP						Integrated Resource Plan
IUB						Iowa Utilities Board
kV						Kilovolt


MW						Megawatt
MWh						Megawatt Hour
NAAQS						National Ambient Air Quality Standards
NOx						Nitrogen Oxides

Ofgem						Office of Gas and Electric Markets
OPUC						Oregon Public Utility Commission
PTC						Production Tax Credit
PUCN						Public Utilities Commission of Nevada


RFP						Request for Proposals
RPS						Renewable Portfolio Standards

SCR						Selective Catalytic Reduction
SEC						United States Securities and Exchange Commission
SIP						State Implementation Plan
SO2						Sulfur Dioxide

UPSC						Utah Public Service Commission

WUTC						Washington Utilities and Transportation Commission

iii

Forward-Looking Statements

This report contains statements that do not directly or exclusively relate to historical facts. These statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by the use of forward-looking words, such as "will," "may," "could," "project," "believe," "anticipate," "expect," "estimate," "continue," "intend," "potential," "plan," "forecast" and similar terms. These statements are based upon the relevant Registrant's current intentions, assumptions, expectations and beliefs and are subject to risks, uncertainties and other important factors. Many of these factors are outside the control of each Registrant and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others:

•general economic, political and business conditions, as well as changes in, and compliance with, laws and regulations, including income tax reform, initiatives regarding deregulation and restructuring of the utility industry, and reliability and safety standards, affecting the respective Registrant's operations or related industries;

•changes in, and compliance with, environmental laws, regulations, decisions and policies that could, among other items, increase operating and capital costs, reduce facility output, accelerate facility retirements or delay facility construction or acquisition;

•the outcome of regulatory rate reviews and other proceedings conducted by regulatory agencies or other governmental and legal bodies and the respective Registrant's ability to recover costs through rates in a timely manner;

•changes in economic, industry, competition or weather conditions, as well as demographic trends, new technologies and various conservation, energy efficiency and private generation measures and programs, that could affect customer growth and usage, electricity and natural gas supply or the respective Registrant's ability to obtain long-term contracts with customers and suppliers;

•performance, availability and ongoing operation of the respective Registrant's facilities, including facilities not operated by the Registrants, due to the impacts of market conditions, outages and associated repairs, transmission constraints, weather, including wind, solar and hydroelectric conditions, and operating conditions;

•the effects of catastrophic and other unforeseen events, which may be caused by factors beyond the control of each respective Registrant or by a breakdown or failure of the Registrants' operating assets, including severe storms, floods, fires, extreme temperature events, wind events, earthquakes, explosions, landslides, an electromagnetic pulse, mining incidents, litigation, wars (including, for example, Russia's invasion of Ukraine in February 2022), terrorism, pandemics, embargoes, and cyber security attacks, data security breaches, disruptions, or other malicious acts;

•the risks and uncertainties associated with wildfires that have occurred, are occurring or may occur in the respective Registrant's service territory, including the wildfires that began in September 2020 in Oregon and California, and any other wildfires for which the cause has yet to be determined; the damage caused by such wildfires; the extent of the respective Registrant's liability in connection with such wildfires (including the risk that the respective Registrant may be found liable for damages regardless of fault); investigations into such wildfires; the outcome of any legal proceedings initiated against the respective Registrant; the risk that the respective Registrant is not able to recover costs from insurance or through rates; and the effect on the respective Registrant's reputation of such wildfires, investigations and proceedings;

•the respective Registrant's ability to reduce wildfire threats and improve safety, including the ability to comply with the targets and metrics set forth in its wildfire mitigation plans; to retain or contract for the workforce necessary to execute its wildfire mitigation plans; the effectiveness of its system hardening; ability to achieve vegetation management targets; and the cost of these programs and the timing and outcome of any proceeding to recover such costs through rates;

•the ability to economically obtain insurance coverage, or any insurance coverage at all, sufficient to cover losses arising from catastrophic events, such as wildfires where the Registrants may be found liable for real and personal property damages regardless of fault;

•a high degree of variance between actual and forecasted load or generation that could impact a Registrant's hedging strategy and the cost of balancing its generation resources with its retail load obligations;

•changes in prices, availability and demand for wholesale electricity, coal, natural gas, other fuel sources and fuel transportation that could have a significant impact on generating capacity and energy costs;

•the financial condition, creditworthiness and operational stability of the respective Registrant's significant customers and suppliers;

•changes in business strategy or development plans;

•availability, terms and deployment of capital, including reductions in demand for investment-grade commercial paper, debt securities and other sources of debt financing and volatility in interest rates;

•changes in the respective Registrant's credit ratings;

•risks relating to nuclear generation, including unique operational, closure and decommissioning risks;

•hydroelectric conditions and the cost, feasibility and eventual outcome of hydroelectric relicensing proceedings;

•the impact of certain contracts used to mitigate or manage volume, price and interest rate risk, including increased collateral requirements, and changes in commodity prices, interest rates and other conditions that affect the fair value of certain contracts;

•the impact of inflation on costs and the ability of the respective Registrants to recover such costs in regulated rates;

•fluctuations in foreign currency exchange rates, primarily the British pound and the Canadian dollar;

•increases in employee healthcare costs;

•the impact of investment performance, certain participant elections such as lump sum distributions and changes in interest rates, legislation, healthcare cost trends, mortality, morbidity on pension and other postretirement benefits expense and funding requirements;

•changes in the residential real estate brokerage, mortgage and franchising industries and regulations that could affect brokerage, mortgage and franchising transactions;

•the ability to successfully integrate future acquired operations into a Registrant's business;

•the impact of supply chain disruptions and workforce availability on the respective Registrant's ongoing operations and its ability to timely complete construction projects;

•unanticipated construction delays, changes in costs, receipt of required permits and authorizations, ability to fund capital projects and other factors that could affect future facilities and infrastructure additions;

•the availability and price of natural gas in applicable geographic regions and demand for natural gas supply;

•the impact of new accounting guidance or changes in current accounting estimates and assumptions on the financial results of the respective Registrants; and

•other business or investment considerations that may be disclosed from time to time in the Registrants' filings with the SEC or in other publicly disseminated written documents.

Further details of the potential risks and uncertainties affecting the Registrants are described in the Registrants' filings with the SEC, including Part II, Item 1A and other discussions contained in this Form 10-Q. Each Registrant undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing factors should not be construed as exclusive.

Item 1.Financial Statements


Berkshire Hathaway Energy Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						4
Consolidated Balance Sheets						5
Consolidated Statements of Operations						7
Consolidated Statements of Comprehensive Income						8
Consolidated Statements of Changes in Equity						9
Consolidated Statements of Cash Flows						10
Notes to Consolidated Financial Statements						11
PacifiCorp and its subsidiaries
Report of Independent Registered Public Accounting Firm						51
Consolidated Balance Sheets						52
Consolidated Statements of Operations						54
Consolidated Statements of Changes in Shareholders' Equity						55
Consolidated Statements of Cash Flows						56
Notes to Consolidated Financial Statements						57
MidAmerican Energy Company
Report of Independent Registered Public Accounting Firm						76
Balance Sheets						77
Statements of Operations						79
Statements of Changes in Shareholder's Equity						80
Statements of Cash Flows						81
Notes to Financial Statements						82
MidAmerican Funding, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						90
Consolidated Balance Sheets						91
Consolidated Statements of Operations						93
Consolidated Statements of Changes in Member's Equity						94
Consolidated Statements of Cash Flows						95
Notes to Consolidated Financial Statements						96
Nevada Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						111
Consolidated Balance Sheets						112
Consolidated Statements of Operations						113
Consolidated Statements of Changes in Shareholder's Equity						114
Consolidated Statements of Cash Flows						115
Notes to Consolidated Financial Statements						116
Sierra Pacific Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						132
Consolidated Balance Sheets						133
Consolidated Statements of Operations						134
Consolidated Statements of Changes in Shareholder's Equity						135
Consolidated Statements of Cash Flows						136
Notes to Consolidated Financial Statements						137
Eastern Energy Gas Holdings, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						155
Consolidated Balance Sheets						156
Consolidated Statements of Operations						158
Consolidated Statements of Comprehensive Income						159
Consolidated Statements of Changes in Equity						160
Consolidated Statements of Cash Flows						161
Notes to Consolidated Financial Statements						162

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


Berkshire Hathaway Energy Company and its subsidiaries						28
PacifiCorp and its subsidiaries						66
MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company						100
Nevada Power Company and its subsidiaries						124
Sierra Pacific Power Company and its subsidiaries						146
Eastern Energy Gas Holdings, LLC and its subsidiaries						169

Berkshire Hathaway Energy Company and its subsidiaries

Consolidated Financial Section

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Berkshire Hathaway Energy Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries (the "Company") as of June 30, 2022, the related consolidated statements of operations, comprehensive income, and changes in equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

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

/s/ Deloitte & Touche LLP

Des Moines, Iowa

August 5, 2022

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,081	$	1,096
Restricted cash and cash equivalents	201		127
Trade receivables, net	2,734		2,468
Income tax receivable	25		344
Inventories	1,163		1,122
Mortgage loans held for sale	1,084		1,263


Regulatory assets	778		544
Other current assets	1,294		1,284
Total current assets	9,360		8,248

Property, plant and equipment, net	90,795		89,816
Goodwill	11,559		11,650
Regulatory assets	3,481		3,419
Investments and restricted cash, cash equivalents and investments	16,728		15,788
Other assets	3,372		3,144

Total assets	$	135,295	$	132,065

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,290	$	2,136
Accrued interest	557		537
Accrued property, income and other taxes	789		606
Accrued employee expenses	457		372
Short-term debt	1,948		2,009
Current portion of long-term debt	2,069		1,265
Other current liabilities	1,802		1,837
Total current liabilities	9,912		8,762

BHE senior debt	13,594		13,003
BHE junior subordinated debentures	100		100
Subsidiary debt	35,354		35,394
Regulatory liabilities	7,028		6,960
Deferred income taxes	13,394		12,938
Other long-term liabilities	4,722		4,319
Total liabilities	84,104		81,476

Commitments and contingencies (Note 8)

Equity:
BHE shareholders' equity:
Preferred stock - 100 shares authorized, $0.01 par value, 1 and 2 shares issued and outstanding	850		1,650
Common stock - 115 shares authorized, no par value, 76 shares issued and outstanding	—		—
Additional paid-in capital	6,298		6,374
Long-term income tax receivable	(744)		(744)
Retained earnings	42,688		40,754
Accumulated other comprehensive loss, net	(1,788)		(1,340)
Total BHE shareholders' equity	47,304		46,694
Noncontrolling interests	3,887		3,895
Total equity	51,191		50,589

Total liabilities and equity	$	135,295	$	132,065

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Energy	$	4,940	$	4,301	$	9,763	$	9,150
Real estate	1,672		1,763		2,879		2,995
Total operating revenue	6,612		6,064		12,642		12,145

Operating expenses:
Energy:
Cost of sales	1,525		1,110		2,985		2,679
Operations and maintenance	1,081		1,037		2,024		1,971
Depreciation and amortization	1,045		936		2,052		1,851
Property and other taxes	199		189		404		399
Real estate	1,555		1,584		2,734		2,704
Total operating expenses	5,405		4,856		10,199		9,604

Operating income	1,207		1,208		2,443		2,541

Other income (expense):
Interest expense	(550)		(532)		(1,082)		(1,062)
Capitalized interest	18		14		35		28
Allowance for equity funds	42		30		80		56
Interest and dividend income	30		26		53		47
Gains on marketable securities, net	2,528		1,966		1,271		848
Other, net	(26)		48		(21)		56
Total other income (expense)	2,042		1,552		336		(27)

Income before income tax expense (benefit) and equity loss	3,249		2,760		2,779		2,514
Income tax expense (benefit)	149		327		(358)		(208)
Equity loss	(83)		(50)		(140)		(229)
Net income	3,017		2,383		2,997		2,493
Net income attributable to noncontrolling interests	120		102		229		208
Net income attributable to BHE shareholders	2,897		2,281		2,768		2,285
Preferred dividends	13		37		29		75
Earnings on common shares	$	2,884	$	2,244	$	2,739	$	2,210

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Net income	$	3,017	$	2,383	$	2,997	$	2,493

Other comprehensive (loss) income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $9, $1, $12 and $5	25		15		40		22
Foreign currency translation adjustment	(481)		68		(591)		159
Unrealized gains on cash flow hedges, net of tax of $8, $(1), $36 and $4	26		1		103		15
Total other comprehensive (loss) income, net of tax	(430)		84		(448)		196

Comprehensive income	2,587		2,467		2,549		2,689
Comprehensive income attributable to noncontrolling interests	120		106		229		212
Comprehensive income attributable to BHE shareholders	$	2,467	$	2,361	$	2,320	$	2,477

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)


	BHE Shareholders' Equity
							Long-term				Accumulated
					Additional		Income				Other
	Preferred		Common		Paid-in		Tax		Retained		Comprehensive		Noncontrolling		Total
	Stock		Stock		Capital		Receivable		Earnings		Loss, Net		Interests		Equity
Balance, March 31, 2021	$	3,750	$	—	$	6,377	$	(658)	$	35,060	$	(1,440)	$	3,962	$	47,051
Net income	—		—		—		—		2,281		—		102		2,383
Other comprehensive income	—		—		—		—		—		80		4		84
Preferred stock dividend	—		—		—		—		(37)		—		—		(37)

Distributions	—		—		—		—		—		—		(121)		(121)
Contributions	—		—		—		—		—		—		9		9

Other equity transactions	—		—		—		—		(1)		—		(3)		(4)
Balance, June 30, 2021	$	3,750	$	—	$	6,377	$	(658)	$	37,303	$	(1,360)	$	3,953	$	49,365

Balance, December 31, 2020	$	3,750	$	—	$	6,377	$	(658)	$	35,093	$	(1,552)	$	3,967	$	46,977
Net income	—		—		—		—		2,285		—		208		2,493
Other comprehensive income	—		—		—		—		—		192		4		196
Preferred stock dividend	—		—		—		—		(75)		—		—		(75)

Distributions	—		—		—		—		—		—		(234)		(234)
Contributions	—		—		—		—		—		—		9		9

Other equity transactions	—		—		—		—		—		—		(1)		(1)
Balance, June 30, 2021	$	3,750	$	—	$	6,377	$	(658)	$	37,303	$	(1,360)	$	3,953	$	49,365

Balance, March 31, 2022	$	1,650	$	—	$	6,374	$	(744)	$	40,608	$	(1,358)	$	3,894	$	50,424
Net income	—		—		—		—		2,897		—		120		3,017
Other comprehensive loss	—		—		—		—		—		(430)		—		(430)
Preferred stock redemptions	(800)		—		—		—		—		—		—		(800)
Preferred stock dividend	—		—		—		—		(13)		—		—		(13)
Common stock purchases	—		—		(77)		—		(793)		—		—		(870)
Distributions	—		—		—		—		—		—		(129)		(129)
Contributions	—		—		—		—		—		—		2		2

Other equity transactions	—		—		1		—		(11)		—		—		(10)
Balance, June 30, 2022	$	850	$	—	$	6,298	$	(744)	$	42,688	$	(1,788)	$	3,887	$	51,191

Balance, December 31, 2021	$	1,650	$	—	$	6,374	$	(744)	$	40,754	$	(1,340)	$	3,895	$	50,589
Net income	—		—		—		—		2,768		—		229		2,997
Other comprehensive loss	—		—		—		—		—		(448)		—		(448)
Preferred stock redemptions	(800)		—		—		—		—		—		—		(800)
Preferred stock dividend	—		—		—		—		(29)		—		—		(29)
Common stock purchases	—		—		(77)		—		(793)		—		—		(870)
Distributions	—		—		—		—		—		—		(245)		(245)
Contributions	—		—		—		—		—		—		2		2

Other equity transactions	—		—		1		—		(12)		—		6		(5)
Balance, June 30, 2022	$	850	$	—	$	6,298	$	(744)	$	42,688	$	(1,788)	$	3,887	$	51,191

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	2,997	$	2,493
Adjustments to reconcile net income to net cash flows from operating activities:
Gains on marketable securities, net	(1,271)		(848)
Depreciation and amortization	2,081		1,874
Allowance for equity funds	(80)		(56)
Equity loss, net of distributions	202		313
Changes in regulatory assets and liabilities	(226)		(199)
Deferred income taxes and investment tax credits, net	385		613
Other, net	37		(26)
Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets	(317)		(254)
Derivative collateral, net	189		92
Pension and other postretirement benefit plans	(21)		(33)
Accrued property, income and other taxes, net	489		76
Accounts payable and other liabilities	682		187
Net cash flows from operating activities	5,147		4,232

Cash flows from investing activities:
Capital expenditures	(3,382)		(2,848)

Purchases of marketable securities	(281)		(185)
Proceeds from sales of marketable securities	257		163

Equity method investments	(28)		(52)
Other, net	(18)		(53)
Net cash flows from investing activities	(3,452)		(2,975)

Cash flows from financing activities:

Preferred stock redemptions	(800)		—
Common stock purchases	(870)		—
Proceeds from BHE senior debt	987		—
Repayments of BHE senior debt	—		(450)
Preferred dividends	(33)		(75)
Proceeds from subsidiary debt	1,201		539
Repayments of subsidiary debt	(542)		(1,210)
Net (repayments of) proceeds from short-term debt	(54)		245

Distributions to noncontrolling interests	(246)		(234)

Other, net	(248)		(19)
Net cash flows from financing activities	(605)		(1,204)

Effect of exchange rate changes	(33)		2

Net change in cash and cash equivalents and restricted cash and cash equivalents	1,057		55
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	1,244		1,445
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	2,301	$	1,500

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

Berkshire Hathaway Energy Company ("BHE") is a holding company that owns a highly diversified portfolio of locally managed and operated businesses principally engaged in the energy industry (collectively with its subsidiaries, the "Company") and is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The Company's operations are organized as eight business segments: PacifiCorp and its subsidiaries ("PacifiCorp"), MidAmerican Funding, LLC and its subsidiaries ("MidAmerican Funding") (which primarily consists of MidAmerican Energy Company ("MidAmerican Energy")), NV Energy, Inc. and its subsidiaries ("NV Energy") (which primarily consists of Nevada Power Company and its subsidiaries ("Nevada Power") and Sierra Pacific Power Company and its subsidiaries ("Sierra Pacific")), Northern Powergrid Holdings Company and its subsidiaries ("Northern Powergrid") (which primarily consists of Northern Powergrid (Northeast) plc and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group, LLC and its subsidiaries (which primarily consists of BHE GT&S, LLC and its subsidiaries ("BHE GT&S"), Northern Natural Gas Company ("Northern Natural Gas") and Kern River Gas Transmission Company ("Kern River")), BHE Transmission (which consists of BHE Canada Holdings Corporation and its subsidiaries ("BHE Canada") (which primarily consists of AltaLink, L.P. ("AltaLink")) and BHE U.S. Transmission, LLC and its subsidiaries), BHE Renewables, LLC and its subsidiaries ("BHE Renewables") and HomeServices of America, Inc. and its subsidiaries ("HomeServices"). The Company, through these locally managed and operated businesses, owns four utility companies in the U.S. serving customers in 11 states, two electricity distribution companies in Great Britain, five interstate natural gas pipeline companies and interests in a liquefied natural gas ("LNG") export, import and storage facility in the U.S., an electric transmission business in Canada, interests in electric transmission businesses in the U.S., a renewable energy business primarily investing in wind, solar, geothermal and hydroelectric projects, the largest residential real estate brokerage firm in the U.S. and one of the largest residential real estate brokerage franchise networks in the U.S.

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2022 and for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in the Company's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022, other than the updates associated with the Company's estimates of loss contingencies related to the Oregon and California 2020 wildfires (the "2020 Wildfires") as discussed in Note 8.

(2) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
	Depreciable	June 30,		December 31,
	Life	2022		2021
Regulated assets:
Utility generation, transmission and distribution systems	5-80 years	$	90,810	$	90,223
Interstate natural gas pipeline assets	3-80 years	17,547		17,423
		108,357		107,646
Accumulated depreciation and amortization		(33,618)		(32,680)
Regulated assets, net		74,739		74,966

Nonregulated assets:
Independent power plants	2-50 years	8,073		7,665
Cove Point LNG facility	40 years	3,373		3,364
Other assets	2-30 years	3,042		2,666
		14,488		13,695
Accumulated depreciation and amortization		(3,206)		(3,041)
Nonregulated assets, net		11,282		10,654

Net operating assets		86,021		85,620
Construction work-in-progress		4,774		4,196
Property, plant and equipment, net		$	90,795	$	89,816

Construction work-in-progress includes $4.4 billion as of June 30, 2022 and $3.8 billion as of December 31, 2021, related to the construction of regulated assets.

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

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


	As of
	June 30,		December 31,
	2022		2021
Investments:
BYD Company Limited common stock	$	9,003	$	7,693
Rabbi trusts	429		492
Other	328		305
Total investments	9,760		8,490

Equity method investments:
BHE Renewables tax equity investments	4,680		4,931
Iroquois Gas Transmission System, L.P.	742		735
Electric Transmission Texas, LLC	606		595


Other	302		293
Total equity method investments	6,330		6,554

Restricted cash, cash equivalents and investments:
Quad Cities Station nuclear decommissioning trust funds	658		768
Other restricted cash and cash equivalents	220		148
Total restricted cash, cash equivalents and investments	878		916

Total investments and restricted cash, cash equivalents and investments	$	16,968	$	15,960

Reflected as:
Current assets	$	240	$	172
Noncurrent assets	16,728		15,788
Total investments and restricted cash, cash equivalents and investments	$	16,968	$	15,960

Investments

Gains on marketable securities, net recognized during the period consists of the following (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Unrealized gains recognized on marketable securities still held at the reporting date	$	2,527	$	1,966	$	1,270	$	847
Net gains recognized on marketable securities sold during the period	1		—		1		1
Gains on marketable securities, net	$	2,528	$	1,966	$	1,271	$	848

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for debt service obligations for certain of the Company's nonregulated renewable energy projects. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021
Cash and cash equivalents	$	2,081	$	1,096
Restricted cash and cash equivalents	201		127
Investments and restricted cash, cash equivalents and investments	19		21
Total cash and cash equivalents and restricted cash and cash equivalents	$	2,301	$	1,244

(4) Recent Financing Transactions

Long-Term Debt

In June 2022, Sierra Pacific purchased $60 million of its variable-rate tax-exempt Gas & Water Facilities Refunding Revenue Bonds, Series 2016B, due 2036, as required by the bond indenture. Sierra Pacific is holding this bond and can re-offer it at a future date.

In May 2022, Sierra Pacific issued $250 million of 4.71% General and Refunding Mortgage bonds, Series W, due 2052. The net proceeds were used to repay the outstanding $200 million unsecured loan with NV Energy, Inc., repay amounts outstanding under its existing revolving credit facility and for general corporate purposes.

In April 2022, BHE issued $1 billion of its 4.6% Senior Notes due 2053 and used the net proceeds for general corporate purposes, which included repaying a portion of BHE's outstanding commercial paper obligations and redeeming a portion of its 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway.

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

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

In January 2022, Nevada Power entered into a $300 million secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest at variable rates based on the Secured Overnight Financing Rate ("SOFR") or a base rate, at Nevada Power's option, plus a pricing margin. In January 2022, Nevada Power borrowed $200 million under the facility at an initial interest rate of 0.55%. In May 2022, Nevada Power drew the remaining $100 million available under the facility at an initial interest rate of 1.24%. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.

Credit Facilities

In June 2022, BHE amended and restated its existing $3.5 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from the London Interbank Offered Rate ("LIBOR") to SOFR.

In June 2022, PacifiCorp amended and restated its existing $1.2 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

In June 2022, MidAmerican Energy amended and restated its existing $1.5 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

In June 2022, Nevada Power and Sierra Pacific each amended and restated its existing $400 million and $250 million secured credit facilities expiring in June 2024. The amendments extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(13)		(13)		(28)		(27)
State income tax, net of federal income tax impacts	(1)		4		—		2
Income tax effect of foreign income	—		3		(1)		3
Effects of ratemaking	(1)		(2)		(2)		(4)
Equity income	(1)		—		(1)		(2)
Noncontrolling interest	(1)		(1)		(2)		(2)
Other, net	1		—		—		1
Effective income tax rate	5	%	12	%	(13)	%	(8)	%

Income tax credits relate primarily to PTCs from wind-powered generating facilities owned by MidAmerican Energy, PacifiCorp and BHE Renewables. Federal renewable electricity PTCs are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the six-month periods ended June 30, 2022 and 2021 totaled $734 million and $678 million, respectively.

Income tax effect on foreign income includes, among other items, a deferred income tax charge of $109 million recognized in June 2021 upon the enactment of an increase in the United Kingdom's corporate income tax rate from 19% to 25% effective April 1, 2023.

The Company's provision for income taxes has been computed on a stand-alone basis. Berkshire Hathaway includes the Company in its consolidated U.S. federal and Iowa state income tax returns and the majority of the Company's U.S. federal income tax is remitted to or received from Berkshire Hathaway. The Company received net cash payments for federal income taxes from Berkshire Hathaway for the six-month periods ended June 30, 2022 and 2021 totaling $1,249 million and $943 million, respectively.

(6) Employee Benefit Plans

Domestic Operations

Net periodic benefit cost (credit) for the domestic pension and other postretirement benefit plans included the following components (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Pension:
Service cost	$	6	$	8	$	13	$	15
Interest cost	19		18		38		38
Expected return on plan assets	(27)		(36)		(54)		(69)
Settlement	—		—		2		—
Net amortization	5		7		9		13
Net periodic benefit cost (credit)	$	3	$	(3)	$	8	$	(3)

Other postretirement:
Service cost	$	4	$	4	$	6	$	6
Interest cost	5		5		10		10
Expected return on plan assets	(7)		(6)		(14)		(11)
Net amortization	(1)		(1)		(1)		(2)
Net periodic benefit cost	$	1	$	2	$	1	$	3

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $13 million and $5 million, respectively, during 2022. As of June 30, 2022, $7 million and $5 million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

Foreign Operations

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Service cost	$	3	$	4	$	7	$	8
Interest cost	9		7		19		15
Expected return on plan assets	(23)		(28)		(48)		(56)

Net amortization	6		14		12		28
Net periodic benefit credit	$	(5)	$	(3)	$	(10)	$	(5)

Amounts other than the service cost for the United Kingdom pension plan are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the United Kingdom pension plan are expected to be £12 million during 2022. As of June 30, 2022, £6 million, or $8 million, of contributions had been made to the United Kingdom pension plan.

(7) Fair Value Measurements

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

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of June 30, 2022:
Assets:
Commodity derivatives	$	11	$	660	$	77	$	(164)	$	584

Interest rate derivatives	16		45		24		—		85
Mortgage loans held for sale	—		1,084		—		—		1,084
Money market mutual funds	1,492		—		—		—		1,492
Debt securities:
U.S. government obligations	220		—		—		—		220
International government obligations	—		1		—		—		1
Corporate obligations	—		75		—		—		75
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:
U.S. companies	348		—		—		—		348
International companies	9,011		—		—		—		9,011
Investment funds	258		—		—		—		258
	$	11,356	$	1,869	$	101	$	(164)	$	13,162
Liabilities:
Commodity derivatives	$	(14)	$	(211)	$	(255)	$	77	$	(403)
Foreign currency exchange rate derivatives	—		(19)		—		—		(19)
Interest rate derivatives	—		(6)		(3)		—		(9)
	$	(14)	$	(236)	$	(258)	$	77	$	(431)


	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:
U.S. 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:
U.S. 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)

(1)Represents netting under master netting arrangements and a net cash collateral payable of $87 million and receivable of $26 million as of June 30, 2022 and December 31, 2021, respectively.

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

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

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

The following table reconciles the beginning and ending balances of the Company's financial assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs (in millions). Transfers out of Level 3 occur primarily due to increased price observability.


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
			Interest				Interest
	Commodity		Rate		Commodity		Rate
	Derivatives		Derivatives		Derivatives		Derivatives
2022:
Beginning balance	$	(239)	$	13	$	(151)	$	19
Changes included in earnings(1)	(26)		8		(82)		2
Changes in fair value recognized in OCI	5		—		10		—
Changes in fair value recognized in net regulatory assets	1		—		(59)		—

Purchases	1		—		1		—

Settlements	11		—		34		—
Transfers out of Level 3 into Level 2	69		—		69		—

Ending balance	$	(178)	$	21	$	(178)	$	21







2021:
Beginning balance	$	124	$	41	$	116	$	62
Changes included in earnings(1)	(10)		—		(16)		(21)
Changes in fair value recognized in OCI	(6)		—		(7)		—
Changes in fair value recognized in net regulatory assets	(7)		—		9		—
Purchases	1		—		1		—

Settlements	3		—		2		—

Ending balance	$	105	$	41	$	105	$	41

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

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


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	51,117	$	48,636	$	49,762	$	57,189

(8) Commitments and Contingencies

Construction Commitments

During the six-month period ended June 30, 2022, PacifiCorp entered into a procurement and construction services agreement for $849 million through 2024 for the construction of a key Energy Gateway Transmission segment extending between the Aeolus substation near Medicine Bow, Wyoming and the Clover substation near Mona, Utah.

Fuel Contracts

During the six-month period ended June 30, 2022, PacifiCorp entered into certain coal supply and transportation agreements totaling approximately $200 million through 2024.

Legal Matters

The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. The Company is also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines, penalties and other costs in substantial amounts and are described below.

2020 Wildfires

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

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

In California, under inverse condemnation, courts have held that investor-owned utilities can be liable for real and personal property damages without the utility being found negligent and regardless of fault. California law also permits inverse condemnation plaintiffs to recover reasonable attorney fees and costs. In both Oregon and California, PacifiCorp has equipment in areas accessed through special use permits, easements or similar agreements that may contain provisions requiring it to pay for damages caused by its equipment regardless of fault. Even if inverse condemnation or other provisions do not apply, PacifiCorp could nevertheless be found liable for all damages proximately caused by negligence, including real and personal property and natural resource damage; fire suppression costs; personal injury and loss of life damages; and interest.

During the three-month period ended June 30, 2022, PacifiCorp accrued $64 million of losses net of expected insurance recoveries associated with the 2020 Wildfires resulting in an overall loss accrual net of expected insurance recoveries of $200 million as of June 30, 2022 compared to $136 million as of December 31, 2021. These accruals include PacifiCorp's estimate of losses for fire suppression costs, real and personal property damages, natural resource damages and noneconomic damages such as personal injury damages and loss of life damages that are considered probable of being incurred and that it is reasonably able to estimate at this time. For certain aspects of the 2020 Wildfires for which loss is considered probable, information necessary to reasonably estimate the potential losses, such as those related to natural resource damages, is not currently available. It is reasonably possible that PacifiCorp will incur additional losses beyond the amounts accrued; however, PacifiCorp is currently unable to estimate the range of possible additional losses that could be incurred due to the number of properties and parties involved and the variation in those types of properties and lack of available details. To the extent losses beyond the amounts accrued are incurred, additional insurance coverage is expected to be available to cover at least a portion of the losses. PacifiCorp's receivable for expected insurance recoveries was $277 million as of June 30, 2022.

Environmental Laws and Regulations

The Company is subject to federal, state, local and foreign laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact the Company's current and future operations. The Company believes it is in material compliance with all applicable laws and regulations.

Hydroelectric Relicensing

PacifiCorp is a party to the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended to resolve disputes surrounding PacifiCorp's efforts to relicense the Klamath Hydroelectric Project. The KHSA establishes a process for PacifiCorp, the states of Oregon and California ("States") and other stakeholders to assess whether dam removal can occur consistent with the settlement's terms. For PacifiCorp, the key elements of the settlement include: (1) a contribution from PacifiCorp's Oregon and California customers capped at $200 million plus $250 million in California bond funds; (2) complete indemnification from harms associated with dam removal; (3) transfer of the FERC license to a third-party dam removal entity, the Klamath River Renewal Corporation ("KRRC"), who would conduct dam removal; and (4) ability for PacifiCorp to operate the facilities for the benefit of customers until dam removal commences.

In September 2016, the KRRC and PacifiCorp filed a joint application with the FERC to transfer the license for the four mainstem Klamath dams from PacifiCorp to the KRRC. The FERC approved partial transfer of the Klamath license in a July 2020 order, subject to the condition that PacifiCorp remains co-licensee. Under the amended KHSA, PacifiCorp did not agree to remain co-licensee during the surrender and removal process given concerns about liability protections for PacifiCorp and its customers. In November 2020, PacifiCorp entered a memorandum of agreement (the "MOA") with the KRRC, the Karuk Tribe, the Yurok Tribe and the States to continue implementation of the KHSA. The agreement required the States, PacifiCorp and KRRC to file a new license transfer application to remove PacifiCorp from the license for the Klamath Hydroelectric Project and add the States and KRRC as co-licensees for the purposes of surrender. In addition, the MOA provides for additional contingency funding of $45 million, equally split between PacifiCorp and the States, and for PacifiCorp and the States to equally share in any additional cost overruns in the unlikely event that dam removal costs exceed the $450 million in funding to ensure dam removal is complete. The MOA also requires PacifiCorp to cover the costs associated with certain pre-existing environmental conditions. In June 2021, the FERC approved transfer of the four mainstem Klamath dams from PacifiCorp to the KRRC and the States as co-licensees. In July 2021, the Oregon, Wyoming, Idaho and California state public utility commissions conditionally approved the required property transfer applications. In August 2021, PacifiCorp notified the Public Service Commission of Utah of the property transfer, however no formal approval is required in Utah. The transfer will be effective within 30 days following the issuance of a license surrender from the FERC for the project, which remains pending. In February 2022, the FERC staff issued a draft environmental impact statement for the project, concluding that dam removal is the preferred alternative. A final environmental impact statement is expected later in 2022.

Guarantees

The Company has entered into guarantees as part of the normal course of business and the sale of certain assets. These guarantees are not expected to have a material impact on the Company's consolidated financial results.

(9) Revenue from Contracts with Customers

Energy Products and Services

The following table summarizes the Company's energy products and services revenue from contracts with customers ("Customer Revenue") by regulated and nonregulated, with further disaggregation of regulated by line of business, including a reconciliation to the Company's reportable segment information included in Note 12 (in millions):


	For the Three-Month Period Ended June 30, 2022
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	1,167	$	594	$	831	$	—	$	—	$	—	$	—	$	(1)	$	2,591
Retail gas	—		136		28		—		—		—		—		—		164
Wholesale	55		119		15		—		—		—		—		(2)		187
Transmission and distribution	45		13		18		274		—		172		—		—		522
Interstate pipeline	—		—		—		—		524		—		—		(27)		497
Other	28		—		—		—		—		—		—		—		28
Total Regulated	1,295		862		892		274		524		172		—		(30)		3,989
Nonregulated	—		—		1		42		285		15		262		151		756
Total Customer Revenue	1,295		862		893		316		809		187		262		121		4,745
Other revenue	19		35		6		29		47		(4)		32		31		195
Total	$	1,314	$	897	$	899	$	345	$	856	$	183	$	294	$	152	$	4,940


	For the Six-Month Period Ended June 30, 2022
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	2,352	$	1,066	$	1,430	$	—	$	—	$	—	$	—	$	(1)	$	4,847
Retail gas	—		473		79		—		—		—		—		—		552
Wholesale	110		280		35		—		—		—		—		(2)		423
Transmission and distribution	77		28		35		543		—		348		—		—		1,031
Interstate pipeline	—		—		—		—		1,269		—		—		(68)		1,201
Other	48		—		1		—		1		—		—		—		50
Total Regulated	2,587		1,847		1,580		543		1,270		348		—		(71)		8,104
Nonregulated	—		2		1		57		563		22		431		284		1,360
Total Customer Revenue	2,587		1,849		1,581		600		1,833		370		431		213		9,464
Other revenue	24		53		11		60		58		(4)		30		67		299
Total	$	2,611	$	1,902	$	1,592	$	660	$	1,891	$	366	$	461	$	280	$	9,763


	For the Three-Month Period Ended June 30, 2021
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	1,188	$	516	$	708	$	—	$	—	$	—	$	—	$	(1)	$	2,411
Retail gas	—		89		20		—		—		—		—		—		109
Wholesale	30		69		10		—		—		—		—		(1)		108
Transmission and distribution	37		15		22		243		—		178		—		—		495
Interstate pipeline	—		—		—		—		458		—		—		(25)		433
Other	31		—		1		—		(1)		—		—		—		31
Total Regulated	1,286		689		761		243		457		178		—		(27)		3,587
Nonregulated	—		1		1		8		232		7		239		124		612
Total Customer Revenue	1,286		690		762		251		689		185		239		97		4,199
Other revenue	12		3		5		29		17		(3)		28		11		102
Total	$	1,298	$	693	$	767	$	280	$	706	$	182	$	267	$	108	$	4,301


	For the Six-Month Period Ended June 30, 2021
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	2,333	$	968	$	1,219	$	—	$	—	$	—	$	—	$	(1)	$	4,519
Retail gas	—		549		58		—		—		—		—		—		607
Wholesale	66		194		25		—		17		—		—		(1)		301
Transmission and distribution	62		30		43		506		—		350		—		—		991
Interstate pipeline	—		—		—		—		1,273		—		—		(66)		1,207
Other	54		—		1		—		1		—		—		—		56
Total Regulated	2,515		1,741		1,346		506		1,291		350		—		(68)		7,681
Nonregulated	—		11		1		18		469		15		405		311		1,230
Total Customer Revenue	2,515		1,752		1,347		524		1,760		365		405		243		8,911
Other revenue	25		8		11		56		39		(3)		52		51		239
Total	$	2,540	$	1,760	$	1,358	$	580	$	1,799	$	362	$	457	$	294	$	9,150

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

Real Estate Services

The following table summarizes the Company's real estate services Customer Revenue by line of business (in millions):


	HomeServices
	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Customer Revenue:
Brokerage	$	1,544	$	1,569	$	2,636	$	2,591
Franchise	17		24		37		42
Total Customer Revenue	1,561		1,593		2,673		2,633
Mortgage and other revenue	111		170		206		362
Total	$	1,672	$	1,763	$	2,879	$	2,995

Remaining Performance Obligations

The following table summarizes the Company's revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of June 30, 2022, by reportable segment (in millions):


	Performance obligations expected to be satisfied:
	Less than 12 months		More than 12 months		Total
BHE Pipeline Group	$	3,324	$	21,878	$	25,202
BHE Transmission	695		348		1,043
Total	$	4,019	$	22,226	$	26,245

(10) BHE Shareholders' Equity

In May 2022, BHE redeemed at par 800,006 shares of its 4.00% Perpetual Preferred Stock from certain subsidiaries of Berkshire Hathaway Inc. for $800 million, plus an additional amount equal to the accrued dividends on the pro rata shares redeemed.

In June 2022, BHE purchased 740,961 shares of its common stock held by Mr. Gregory E. Abel, BHE's Chair, for $870 million. The purchase was pursuant to the terms of BHE's Shareholders Agreement.

(11) Components of Accumulated Other Comprehensive Loss, Net

The following table shows the change in accumulated other comprehensive loss by each component of other comprehensive income (loss), net of applicable income tax (in millions):


	Unrecognized		Foreign		Unrealized				AOCI
	Amounts on		Currency		(Losses) Gains				Attributable
	Retirement		Translation		on Cash		Noncontrolling		To BHE
	Benefits		Adjustment		Flow Hedges		Interests		Shareholders, Net

Balance, December 31, 2020	$	(492)	$	(1,062)	$	(8)	$	10	$	(1,552)
Other comprehensive income (loss)	22		159		15		(4)		192
Balance, June 30, 2021	$	(470)	$	(903)	$	7	$	6	$	(1,360)

Balance, December 31, 2021	$	(318)	$	(1,086)	$	59	$	5	$	(1,340)
Other comprehensive income (loss)	40		(591)		103		—		(448)
Balance, June 30, 2022	$	(278)	$	(1,677)	$	162	$	5	$	(1,788)

(12) Segment Information

The Company's reportable segments with foreign operations include Northern Powergrid, whose business is principally in the United Kingdom, and BHE Transmission, whose business includes operations in Canada. Intersegment eliminations and adjustments, including the allocation of goodwill, have been made. Information related to the Company's reportable segments is shown below (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
PacifiCorp	$	1,314	$	1,298	$	2,611	$	2,540
MidAmerican Funding	897		693		1,902		1,760
NV Energy	899		767		1,592		1,358
Northern Powergrid	345		280		660		580
BHE Pipeline Group	856		706		1,891		1,799
BHE Transmission	183		182		366		362
BHE Renewables	294		267		461		457
HomeServices	1,672		1,763		2,879		2,995
BHE and Other(1)	152		108		280		294
Total operating revenue	$	6,612	$	6,064	$	12,642	$	12,145





Depreciation and amortization:
PacifiCorp	$	279	$	275	$	559	$	539
MidAmerican Funding	277		209		527		416
NV Energy	139		137		279		273
Northern Powergrid	100		73		180		144
BHE Pipeline Group	125		121		256		239
BHE Transmission	60		60		118		118
BHE Renewables	66		61		131		121
HomeServices	14		12		29		23
BHE and Other(1)	(1)		(1)		2		1
Total depreciation and amortization	$	1,059	$	947	$	2,081	$	1,874


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating income:
PacifiCorp	$	158	$	283	$	374	$	517
MidAmerican Funding	90		103		190		151
NV Energy	140		145		202		215
Northern Powergrid	110		126		269		277
BHE Pipeline Group	352		245		890		863
BHE Transmission	84		85		167		166
BHE Renewables	134		97		132		130
HomeServices	117		179		145		291
BHE and Other(1)	22		(55)		74		(69)
Total operating income	1,207		1,208		2,443		2,541
Interest expense	(550)		(532)		(1,082)		(1,062)
Capitalized interest	18		14		35		28
Allowance for equity funds	42		30		80		56
Interest and dividend income	30		26		53		47
Gains on marketable securities, net	2,528		1,966		1,271		848
Other, net	(26)		48		(21)		56
Total income before income tax expense (benefit) and equity loss	$	3,249	$	2,760	$	2,779	$	2,514





Interest expense:
PacifiCorp	$	107	$	105	$	213	$	212
MidAmerican Funding	83		78		165		156
NV Energy	52		51		103		103
Northern Powergrid	34		32		66		65
BHE Pipeline Group	36		40		73		78
BHE Transmission	38		40		76		78
BHE Renewables	45		40		86		80
HomeServices	2		1		3		2
BHE and Other(1)	153		145		297		288
Total interest expense	$	550	$	532	$	1,082	$	1,062


Earnings on common shares:
PacifiCorp	$	83	$	226	$	213	$	395
MidAmerican Funding	204		211		445		355
NV Energy	93		100		122		134
Northern Powergrid	71		(25)		182		79
BHE Pipeline Group	199		100		521		483
BHE Transmission	62		60		124		119
BHE Renewables	249		181		353		197
HomeServices	84		135		105		219
BHE and Other(1)	1,839		1,256		674		229
Total earnings on common shares	$	2,884	$	2,244	$	2,739	$	2,210


	As of
	June 30,		December 31,
	2022		2021
Assets:
PacifiCorp	$	28,596	$	27,615
MidAmerican Funding	25,733		25,352
NV Energy	15,905		15,239
Northern Powergrid	9,343		9,326
BHE Pipeline Group	20,691		20,434
BHE Transmission	9,441		9,476
BHE Renewables	11,853		11,829
HomeServices	4,115		4,574
BHE and Other(1)	9,618		8,220
Total assets	$	135,295	$	132,065

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue by country:
U.S.	$	6,087	$	5,604	$	11,621	$	11,201
United Kingdom	345		280		660		580
Canada	180		180		361		357
Other	—		—		—		7
Total operating revenue by country	$	6,612	$	6,064	$	12,642	$	12,145


Income before income tax expense (benefit) and equity loss by country:
U.S.	$	3,117	$	2,611	$	2,463	$	2,188
United Kingdom	87		104		226		236
Canada	46		46		92		85
Other	(1)		(1)		(2)		5
Total income before income tax expense (benefit) and equity loss by country	$	3,249	$	2,760	$	2,779	$	2,514

The following table shows the change in the carrying amount of goodwill by reportable segment for the six-month period ended June 30, 2022 (in millions):


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

December 31, 2021	$	1,129	$	2,102	$	2,369	$	992	$	1,814	$	1,563	$	95	$	1,586	$	11,650
Acquisitions	—		—		—		—		—		—		—		8		8
Foreign currency translation	—		—		—		(70)		—		(29)		—		—		(99)

June 30, 2022	$	1,129	$	2,102	$	2,369	$	922	$	1,814	$	1,534	$	95	$	1,594	$	11,559

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

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

BHE is a holding company that owns a highly diversified portfolio of locally managed businesses principally engaged in the energy industry and is a consolidated subsidiary of Berkshire Hathaway. As of August 4, 2022, Berkshire Hathaway and family members and related or affiliated entities of the late Mr. Walter Scott, Jr., a former member of BHE's Board of Directors, beneficially owned 92% and 8%, respectively, of BHE's common stock.

Berkshire Hathaway Energy's operations are organized as eight business segments: PacifiCorp, MidAmerican Funding (which primarily consists of MidAmerican Energy), NV Energy (which primarily consists of Nevada Power and Sierra Pacific), Northern Powergrid (which primarily consists of Northern Powergrid (Northeast) plc and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which primarily consists of BHE GT&S, Northern Natural Gas and Kern River), BHE Transmission (which consists of BHE Canada (which primarily consists of AltaLink) and BHE U.S. Transmission), BHE Renewables and HomeServices. BHE, through these locally managed and operated businesses, owns four utility companies in the U.S. serving customers in 11 states, two electricity distribution companies in Great Britain, five interstate natural gas pipeline companies, one of which owns a liquefied natural gas ("LNG") export, import and storage facility, in the U.S., an electric transmission business in Canada, interests in electric transmission businesses in the U.S., a renewable energy business primarily investing in wind, solar, geothermal and hydroelectric projects, the largest residential real estate brokerage firm in the U.S. and one of the largest residential real estate brokerage franchise networks in the U.S. The reportable segment financial information includes all necessary adjustments and eliminations needed to conform to the Company's significant accounting policies. The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other, relate principally to other entities, including MidAmerican Energy Services, LLC, corporate functions and intersegment eliminations.

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Operating revenue:
PacifiCorp	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
MidAmerican Funding	897		693		204		29		1,902		1,760		142		8
NV Energy	899		767		132		17		1,592		1,358		234		17
Northern Powergrid	345		280		65		23		660		580		80		14
BHE Pipeline Group	856		706		150		21		1,891		1,799		92		5
BHE Transmission	183		182		1		1		366		362		4		1
BHE Renewables	294		267		27		10		461		457		4		1
HomeServices	1,672		1,763		(91)		(5)		2,879		2,995		(116)		(4)
BHE and Other	152		108		44		41		280		294		(14)		(5)
Total operating revenue	$	6,612	$	6,064	$	548	9	%	$	12,642	$	12,145	$	497	4	%

Earnings on common shares:
PacifiCorp	$	83	$	226	$	(143)	(63)	%	$	213	$	395	$	(182)	(46)	%
MidAmerican Funding	204		211		(7)		(3)		445		355		90		25
NV Energy	93		100		(7)		(7)		122		134		(12)		(9)
Northern Powergrid	71		(25)		96		*		182		79		103		*
BHE Pipeline Group	199		100		99		99		521		483		38		8
BHE Transmission	62		60		2		3		124		119		5		4
BHE Renewables(1)	249		181		68		38		353		197		156		79
HomeServices	84		135		(51)		(38)		105		219		(114)		(52)
BHE and Other	1,839		1,256		583		46		674		229		445		*
Total earnings on common shares	$	2,884	$	2,244	$	640	29	%	$	2,739	$	2,210	$	529	24	%

(1)Includes the tax attributes of disregarded entities that are not required to pay income taxes and the earnings of which are taxable directly to BHE.

* Not meaningful

Earnings on common shares increased $640 million for the second quarter of 2022 compared to 2021. The second quarter of 2022 included a pre-tax unrealized gain of $2,557 million ($2,020 million after-tax) compared to a pre-tax unrealized gain in the second quarter of 2021 of $1,954 million ($1,420 million after-tax) on the Company's investment in BYD Company Limited. Excluding the impact of this item, adjusted earnings on common shares for the second quarter of 2022 was $864 million, an increase of $40 million, or 5%, compared to adjusted earnings on common shares in the second quarter of 2021 of $824 million.

Earnings on common shares increased $529 million for the first six months of 2022 compared to 2021. The first six months of 2022 included a pre-tax unrealized gain of $1,310 million ($1,035 million after-tax) compared to a pre-tax unrealized gain in the first six months of 2021 of $830 million ($602 million after-tax) on the Company's investment in BYD Company Limited. Excluding the impact of this item, adjusted earnings on common shares for the first six months of 2022 was $1,704 million, an increase of $96 million, or 6%, compared to adjusted earnings on commons shares in the first six months of 2021 of $1,608 million.

The increases in earnings on common shares for the second quarter and for the first six months of 2022 compared to 2021 were primarily due to the following:

•The Utilities' earnings decreased $157 million for the second quarter and $104 million for the first six months of 2022 compared to 2021, reflecting higher operations and maintenance expense, higher depreciation and amortization expense and unfavorable investment earnings, partially offset by higher electric utility margin and a favorable income tax benefit from higher PTCs recognized. Electric retail customer volumes increased 1.3% for the first six months of 2022 compared to 2021, primarily due to higher customer usage and an increase in the average number of customers;

•Northern Powergrid's earnings increased $96 million for the second quarter and $103 million for the first six months of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023;

•BHE Pipeline Group's earnings increased $99 million for the second quarter and $38 million for the first six months of 2022 compared to 2021, largely due to higher earnings at BHE GT&S from favorable state unitary income tax adjustments, the impacts of the EGTS general rate case and lower operations and maintenance expense. In addition, earnings for the first six months decreased from the effects of higher margins on natural gas sales and higher transportation revenue in the first quarter of 2021 at Northern Natural Gas from the February 2021 polar vortex weather event;

•BHE Renewables' earnings increased $68 million for the second quarter and $156 million for the first six months of 2022 compared to 2021, primarily due to higher operating revenue from owned renewable energy projects and higher earnings from tax equity investments, with the first six months being positively impacted by the unfavorable impacts in the first quarter of 2021 from the February 2021 polar vortex weather event;

•HomeServices' earnings decreased $51 million for the second quarter and $114 million for the first six months of 2022 compared to 2021, reflecting lower earnings from mortgage services mainly from a decrease in funded volumes and lower earnings from brokerage and settlement services largely attributable to a decrease in closed units at existing companies; and

•BHE and Other's earnings increased $583 million for the second quarter and $445 million for the first six months of 2022 compared to 2021, mainly due to $600 million and $433 million, respectively, of favorable changes in the after-tax unrealized position of the Company's investment in BYD Company Limited and lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway, partially offset by lower federal income tax credits recognized on a consolidated basis.

Reportable Segment Results

PacifiCorp

Operating revenue increased $16 million for the second quarter of 2022 compared to 2021, primarily due to higher wholesale and other revenue of $30 million, partially offset by lower retail revenue of $14 million. Wholesale and other revenue increased primarily due to higher average wholesale prices and higher wheeling revenue. Retail revenue decreased primarily due to lower retail volumes of $42 million, partially offset by price impacts of $28 million from higher average retail rates primarily due to tariff changes. Retail customer volumes decreased 3.3%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers.

Earnings decreased $143 million for the second quarter of 2022 compared to 2021, primarily due to higher operations and maintenance expense of $120 million, an unfavorable income tax benefit and unfavorable changes in the cash surrender value of corporate-owned life insurance policies, partially offset by higher utility margin of $6 million. Operations and maintenance expense increased mainly due to an increase in the loss accruals associated with the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased power costs and the higher wholesale and other revenue, partially offset by higher thermal generation costs, the lower retail revenue and lower deferred net power costs in accordance with established adjustment mechanisms. The unfavorable income tax benefit was largely due to lower PTCs recognized of $22 million and the effects of ratemaking of $18 million.

Operating revenue increased $71 million for the first six months of 2022 compared to 2021, primarily due to higher wholesale and other revenue of $45 million and higher retail revenue of $26 million. Wholesale and other revenue increased primarily due to higher average wholesale prices and higher wheeling revenue. Retail revenue increased primarily due to price impacts of $43 million from higher average retail rates largely due to tariff changes, partially offset by lower retail volumes of $17 million. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers.

Earnings decreased $182 million for the first six months of 2022 compared to 2021, primarily due to higher operations and maintenance expense of $138 million, an unfavorable income tax benefit, higher depreciation and amortization expense of $20 million, mainly from additional assets placed in-service, and unfavorable changes in the cash surrender value of corporate-owned life insurance policies, partially offset by higher utility margin of $20 million. Operations and maintenance expense increased mainly due to an increase in loss accruals related to the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to the higher retail, wholesale and other revenues, partially offset by higher thermal generation costs. The unfavorable income tax benefit was largely due to lower PTCs recognized of $27 million and the effects of ratemaking of $27 million.

MidAmerican Funding

Operating revenue increased $204 million for the second quarter of 2022 compared to 2021, primarily due to higher electric operating revenue of $139 million and higher natural gas operating revenue of $65 million. Electric operating revenue increased due to higher retail revenue of $77 million and higher wholesale and other revenue of $62 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $59 million (fully offset in expense, primarily cost of sales) and higher customer volumes of $11 million. Electric wholesale and other revenue increased mainly due to higher average wholesale per-unit prices of $59 million. Electric retail customer volumes increased 3.3% due to higher customer usage and the favorable impact of weather. Natural gas operating revenue increased due to higher purchased gas adjustment recoveries of $63 million (fully offset in cost of sales), primarily from a higher average per-unit cost of natural gas sold.

Earnings decreased $7 million for the second quarter of 2022 compared to 2021, primarily due to higher depreciation and amortization expense of $68 million, unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $16 million and higher interest expense of $5 million, partially offset by higher electric utility margin of $68 million, a favorable income tax benefit and higher allowances for equity and borrowed funds used during construction of $9 million. Depreciation and amortization expense increased primarily from the impacts of certain regulatory mechanisms and additional assets placed in-service. Electric utility margin increased primarily due to the higher retail and wholesale revenues, partially offset by higher purchased power costs. The favorable income tax benefit was largely due to higher PTCs recognized of $39 million from higher wind-powered generation, partially offset by the effects of ratemaking.

Operating revenue increased $142 million for the first six months of 2022 compared to 2021, primarily due to higher electric operating revenue of $202 million, partially offset by lower natural gas operating revenue of $51 million. Electric operating revenue increased due to higher wholesale and other revenue of $105 million and higher retail revenue of $97 million. Electric wholesale and other revenue increased mainly due to higher average wholesale per-unit prices of $78 million and higher wholesale volumes of $28 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $63 million (fully offset in expense, primarily cost of sales) and higher customer volumes of $28 million. Electric retail customer volumes increased 4.4% due to higher customer usage and the favorable impact of weather. Natural gas operating revenue decreased due to lower purchased gas adjustment recoveries of $71 million (fully offset in cost of sales), primarily from a lower average per-unit cost of natural gas sold driven largely by the February 2021 polar vortex weather event, partially offset by the impacts of certain regulatory recovery mechanisms of $5 million, the impacts of tax reform of $5 million and the favorable impact of weather of $5 million.

Earnings increased $90 million for the first six months of 2022 compared to 2021, primarily due to higher electric utility margin of $157 million, a favorable income tax benefit, higher natural gas utility margin of $20 million and higher allowances for equity and borrowed funds used during construction of $20 million, partially offset by higher depreciation and amortization expense of $111 million, unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $15 million, higher interest expense of $9 million and lower nonregulated utility margin of $8 million. Electric utility margin increased primarily due to the higher wholesale and retail revenues, partially offset by higher purchased power costs. The favorable income tax benefit was mainly due to higher PTCs recognized of $91 million from higher wind-powered generation, partially offset by the effects of ratemaking. Depreciation and amortization expense increased primarily from the impacts of certain regulatory mechanisms and additional assets placed in-service.

NV Energy

Operating revenue increased $132 million for the second quarter of 2022 compared to 2021, primarily due to higher electric operating revenue of $123 million and higher natural gas operating revenue of $8 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of $121 million and higher regulatory-related revenue deferrals of $11 million, partially offset by unfavorable price impacts from changes in sales mix of $12 million. Electric retail customer volumes increased 0.4%, primarily due to an increase in the average number of customers, partially offset by the unfavorable impact of weather. Natural gas operating revenue increased primarily due to a higher average per-unit cost of natural gas sold (fully offset in cost of sales).

Earnings decreased $7 million for the second quarter of 2022 compared to 2021, mainly due to unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher depreciation and amortization expense of $3 million, primarily from additional plant placed in-service, and higher operations and maintenance expense of $2 million, primarily from an unfavorable change in earnings sharing at the Nevada Utilities, partially offset by higher interest and dividend income of $9 million, primarily from carrying charges on regulatory balances.

Operating revenue increased $234 million for the first six months of 2022 compared to 2021, primarily due to higher electric operating revenue of $213 million and higher natural gas operating revenue of $21 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of $209 million, higher regulatory-related revenue deferrals of $8 million and higher transmission and wholesale revenue of $5 million, partially offset by unfavorable price impacts from changes in sales mix of $7 million. Electric retail customer volumes increased 2.0%, primarily due to an increase in the average number of customers and higher customer usage, partially offset by the unfavorable impact of weather. Natural gas operating revenue increased primarily due to a higher average per-unit cost of natural gas sold (fully offset in cost of sales).

Earnings decreased $12 million for the first six months of 2022 compared to 2021, mainly due to unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $8 million, primarily from an unfavorable change in earnings sharing at the Nevada Utilities and increased plant operations and maintenance expenses, and higher depreciation and amortization expense of $6 million, primarily from additional plant placed in-service, partially offset by higher interest and dividend income of $14 million, primarily from carrying charges on regulatory balances.

Northern Powergrid

Operating revenue increased $65 million for the second quarter of 2022 compared to 2021, primarily due to higher distribution revenue of $60 million and revenue from a gas project that commenced commercial operation in March 2022 totaling $40 million, partially offset by $40 million from the stronger U.S. dollar. Distribution revenue increased due to the recovery of Supplier of Last Resort payments totaling $45 million (fully offset in cost of sales) and higher tariff rates of $25 million, partially offset by a 4.0% decline in units distributed of $9 million.

Earnings increased $96 million for the second quarter of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023 and the higher distribution tariff rates, partially offset by higher distribution-related operating and depreciation expenses of $27 million, including higher storm-related costs, $9 million from the stronger U.S. dollar and the decline in units distributed.

Operating revenue increased $80 million for the first six months of 2022 compared to 2021, primarily due to higher distribution revenue of $70 million and revenue from a gas project that commenced commercial operation in March 2022 totaling $50 million, partially offset by $45 million from the stronger U.S. dollar. Distribution revenue increased due to the recovery of Supplier of Last Resort payments totaling $45 million (fully offset in cost of sales) and higher tariff rates of $39 million, partially offset by a 3.3% decline in units distributed of $12 million.

Earnings increased $103 million for the first six months of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023 and the higher distribution tariff rates, partially offset by higher distribution-related operating and depreciation expenses of $27 million, including higher storm-related costs, the decline in units distributed and $8 million from the stronger U.S. dollar.

BHE Pipeline Group

Operating revenue increased $150 million for the second quarter of 2022 compared to 2021, primarily due to higher non-regulated revenue of $58 million (largely offset in cost of sales) at BHE GT&S from favorable pricing, an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, higher LNG variable revenue of $25 million at Cove Point, higher transportation revenue of $17 million at Northern Natural Gas due to higher volumes and rates and higher gas sales of $9 million (largely offset in cost of sales) related to system balancing activities at Northern Natural Gas.

Earnings increased $99 million for the second quarter of 2022 compared to 2021, primarily due to higher earnings of $90 million at BHE GT&S largely due to favorable state unitary income tax adjustments, the impacts of the EGTS general rate case, lower operations and maintenance expense, favorable valuations of system gas and higher margin from non-regulated activities.

Operating revenue increased $92 million for the first six months of 2022 compared to 2021, primarily due to higher non-regulated revenue of $69 million (largely offset in cost of sales) at BHE GT&S from favorable pricing, higher LNG variable revenue of $38 million at Cove Point and an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, partially offset by lower gas sales of $32 million related to system balancing activities at Northern Natural Gas, lower gas sales of $17 million at EGTS used for operational and system balancing purposes and lower transportation revenue of $3 million at Northern Natural Gas. The variances in gas sales and transportation revenue at Northern Natural Gas included favorable impacts recognized in the first quarter of 2021 of $77 million and $49 million, respectively, from the February 2021 polar vortex weather event. Excluding this item, gas sales increased $45 million (largely offset in cost of sales) and transportation revenue increased $46 million due to higher volumes and rates.

Earnings increased $38 million for the first six months of 2022 compared to 2021, primarily due to higher earnings of $99 million at BHE GT&S, partially offset by lower earnings of $60 million at Northern Natural Gas. Earnings at BHE GT&S increased mainly due to favorable state unitary income tax adjustments, the impacts of the EGTS general rate case, lower operations and maintenance expense, favorable property tax assessments, increased earnings at Cove Point and higher margin from non-regulated activities. Earnings at Northern Natural Gas decreased as the higher gross margin on gas sales and higher transportation revenue in the first quarter of 2021 from the February 2021 polar vortex weather event were partially offset by the favorable transportation revenue due to higher volumes and rates.

BHE Transmission

Operating revenue increased $1 million for the second quarter and $4 million for the first six months of 2022 compared to 2021, primarily due to higher non-regulated revenue and higher revenue at AltaLink from recovery of higher costs, partially offset by $7 million from the weaker U.S. dollar.

Earnings increased $2 million for the second quarter and $5 million for the first six months of 2022 compared to 2021, primarily due to the higher non-regulated revenue and improved equity earnings at Electric Transmission Texas, LLC, partially offset by $2 million from the weaker U.S. dollar.

BHE Renewables

Operating revenue increased $27 million for the second quarter of 2022 compared to 2021, primarily due to higher wind, geothermal and solar revenues of $51 million from higher generation and pricing, partially offset by unfavorable changes in the valuation of certain derivative contracts totaling $14 million and lower natural gas revenues of $13 million from lower generation.

Earnings increased $68 million for the second quarter of 2022 compared to 2021, primarily due to higher wind earnings of $58 million and higher geothermal earnings of $11 million, largely due to the higher operating revenue and lower maintenance costs. Wind earnings increased primarily due to higher earnings from owned projects of $31 million, largely from the higher operating revenue and favorable production tax credits offset by the unfavorable derivative contract valuations, and higher earnings from tax equity investments of $27 million, mainly from higher production tax credits offset by unfavorable performance.

Operating revenue increased $4 million for the first six months of 2022 compared to 2021, primarily due to higher wind, geothermal and solar revenues of $77 million from higher generation and pricing, partially offset by unfavorable changes in the valuation of certain derivative contracts totaling $57 million, lower natural gas revenues of $10 million from lower generation and lower hydro revenues of $6 million due to the transfer of the Casecnan generating facility to the Philippine National Irrigation Administration in December 2021.

Earnings increased $156 million for the first six months of 2022 compared to 2021, primarily due to higher wind earnings of $150 million, higher solar earnings of $10 million, mainly due to the higher operating revenue, and higher geothermal earnings of $9 million, largely due to the higher operating revenue and lower maintenance costs, partially offset by lower hydro earnings of $10 million due to the Casecnan generating facility transfer. Wind earnings increased primarily due to higher earnings from tax equity investments of $123 million, mainly as a result of the unfavorable impacts in the first quarter of 2021 from the February 2021 polar vortex weather event and higher production tax credits offset by unfavorable performance, and higher earnings from owned projects of $27 million, largely from the higher operating revenue and favorable production tax credits offset by the unfavorable derivative contract valuations.

HomeServices

Operating revenue decreased $91 million for the second quarter of 2022 compared to 2021, primarily due to lower mortgage revenue of $63 million from a 29% decrease in funded volume due to a decline in refinance activity and lower brokerage and settlement services revenue of $26 million from a decrease in closed transaction volumes.

Earnings decreased $51 million for the second quarter of 2022 compared to 2021, primarily due to lower earnings from brokerage and settlement services of $33 million, largely attributable to the decrease in closed units at existing companies, and lower earnings from mortgage services of $22 million from the decrease in funded volume.

Operating revenue decreased $116 million for the first six months of 2022 compared to 2021, primarily due to lower mortgage revenue of $160 million from a 34% decrease in funded volume due to a decline in refinance activity, partially offset by higher brokerage revenue of $67 million from a 3% increase in closed transaction volume. The increase in brokerage volume was due to acquisitions and a 10% increase in average sales price at existing companies offset by 15% fewer closed units at existing companies.

Earnings decreased $114 million for the first six months of 2022 compared to 2021, primarily due to lower earnings from mortgage services of $71 million and lower earnings from brokerage and settlement services of $49 million due to the decrease in closed units at existing companies. Earnings from mortgage services were lower primarily due to the decrease in funded volumes, partially offset by favorable operating expense variances.

BHE and Other

Operating revenue increased $44 million for the second quarter of 2022 compared to 2021, primarily due to higher electricity and natural gas sales revenue at MidAmerican Energy Services, LLC, from favorable pricing and higher electricity volumes offset by lower natural gas volumes.

Earnings increased $583 million for the second quarter of 2022 compared to 2021, primarily due to the $600 million favorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited, lower corporate costs and $25 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway, partially offset by $41 million of lower federal income tax credits recognized on a consolidated basis, unfavorable changes in the cash surrender value of corporate-owned life insurance policies and higher BHE corporate interest expense from an April 2022 debt issuance.

Operating revenue decreased $14 million for the first six months of 2022 compared to 2021, primarily due to lower electricity sales revenue at MidAmerican Energy Services, LLC, from unfavorable pricing offset by higher volumes, partially offset by higher natural gas sales revenue at MidAmerican Energy Services, LLC, from favorable pricing offset by lower volumes.

Earnings increased $445 million for the first six months of 2022 compared to 2021, primarily due to the $433 million favorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited, lower corporate costs, $46 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway and higher earnings of $45 million at MidAmerican Energy Services, LLC, mainly due to favorable changes in unrealized positions on derivative contracts, partially offset by $95 million of lower federal income tax credits recognized on a consolidated basis, unfavorable changes in the cash surrender value of corporate-owned life insurance policies and higher BHE corporate interest expense from an April 2022 debt issuance.

Liquidity and Capital Resources

Each of BHE's direct and indirect subsidiaries is organized as a legal entity separate and apart from BHE and its other subsidiaries. It should not be assumed that the assets of any subsidiary will be available to satisfy BHE's obligations or the obligations of its other subsidiaries. However, unrestricted cash or other assets that are available for distribution may, subject to applicable law, regulatory commitments and the terms of financing and ring-fencing arrangements for such parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to BHE or affiliates thereof. The Company's long-term debt may include provisions that allow BHE or its subsidiaries to redeem such debt in whole or in part at any time. These provisions generally include make-whole premiums. Refer to Note 18 of Notes to Consolidated Financial Statements in Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of June 30, 2022, the Company's total net liquidity was as follows (in millions):


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

Cash and cash equivalents	$	61	$	390	$	497	$	83	$	327	$	60	$	294	$	369	$	2,081

Credit facilities(1)	3,500		1,200		1,509		650		259		835		3,400		—		11,353
Less:
Short-term debt	(385)		—		—		—		(15)		(378)		(1,170)		—		(1,948)
Tax-exempt bond support and letters of credit	—		(218)		(370)		—		—		(1)		—		—		(589)
Net credit facilities	3,115		982		1,139		650		244		456		2,230		—		8,816

Total net liquidity	$	3,176	$	1,372	$	1,636	$	733	$	571	$	516	$	2,524	$	369	$	10,897
Credit facilities:
Maturity dates	2025		2025		2023, 2025		2025		2024, 2026		2023, 2026		2022, 2023, 2026

(1)Includes $15 million drawn on a capital expenditure credit facility at Northern Powergrid Holdings.

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021 were $5.1 billion and $4.2 billion, respectively. The increase was primarily due to changes in working capital and favorable income tax cash flows.

The timing of the Company's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods selected and assumptions made for each payment date.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021 were $(3.5) billion and $(3.0) billion, respectively. The change was primarily due to higher capital expenditures of $534 million. Refer to "Future Uses of Cash" for a discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2022 was $(605) million. Sources of cash totaled $2,188 million and consisted of proceeds from subsidiary debt issuances totaling $1.2 billion and proceeds from BHE senior debt issuances totaling $987 million. Uses of cash totaled $2,793 million and consisted mainly of purchases of common stock totaling $870 million, preferred stock redemptions of $800 million, repayments of subsidiary debt totaling $542 million, distributions to noncontrolling interests of $246 million and net repayments of short-term debt totaling $54 million.

For discussions of recent financing and BHE shareholders' equity transactions, refer to Notes 4 and 10 of Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Net cash flows from financing activities for the six-month period ended June 30, 2021 was $(1.2) billion. Sources of cash totaled $784 million and consisted of proceeds from subsidiary debt issuances totaling $539 million and net proceeds from short-term debt of $245 million. Uses of cash totaled $2.0 billion and consisted mainly of repayments of subsidiary debt totaling $1.2 billion, repayments of BHE senior debt totaling $450 million and distributions to noncontrolling interests of $234 million.

Future Uses of Cash

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

Capital Expenditures

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

The Company's historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022
Capital expenditures by business:
PacifiCorp	$	819	$	894	$	2,279
MidAmerican Funding	720		862		1,913
NV Energy	365		541		1,228
Northern Powergrid	369		450		776
BHE Pipeline Group	308		457		1,252
BHE Transmission	156		95		210
BHE Renewables	80		60		185
HomeServices	18		20		55
BHE and Other(1)	13		3		16
Total	$	2,848	$	3,382	$	7,914





Capital expenditures by type:
Wind generation	$	483	$	300	$	886
Electric distribution	817		815		1,763
Electric transmission	339		620		1,773
Natural gas transmission and storage	308		336		976
Solar generation	67		100		230
Other	834		1,211		2,286
Total	$	2,848	$	3,382	$	7,914

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

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

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

◦Construction of wind-powered generating facilities at MidAmerican Energy totaling $5 million and $172 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for the construction of additional wind-powered generating facilities totals $106 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at MidAmerican Energy totaling $214 million and $82 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals $314 million for the remainder of 2022. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 593 MWs of current repowering projects not in-service as of June 30, 2022, 292 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.

◦Construction of wind-powered generating facilities at PacifiCorp totaling $4 million and $79 million for the six-month periods ended June 30, 2022 and 2021, respectively. Construction includes 516 MWs of new wind-powered generating facilities that were placed in-service in 2021. Planned spending for the construction of additional wind-powered generating facilities totals $24 million for the remainder of 2022. The energy production from the new wind-powered generating facilities placed in-service by the end of 2024 is expected to qualify for 60% of the federal PTCs available for 10 years once the equipment is placed in-service.

◦Planned acquisition and repowering of two wind-powered generating facilities by PacifiCorp totaling $7 million and $2 million (excluding the 2021 sale of wind turbines) for the six-month periods ended June 30, 2022 and 2021, respectively. In 2021, PacifiCorp sold wind turbines previously acquired from a third party to BHE Wind, LLC, an indirect wholly owned subsidiary of BHE, for $6 million. The repowered facilities are expected to be placed in-service in 2023 and 2024. Planned spending for acquiring and repowering generating facilities totals $14 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at BHE Renewables totaling $45 million for the six-month period ended June 30, 2022. Planned spending for repowering generating facilities totals $43 million for the remainder of 2022.

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

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

◦PacifiCorp's transmission investment primarily reflects planned costs for the 416-mile, 500-kV high-voltage transmission line between the Aeolus substation near Medicine Bow, Wyoming and the Clover substation near Mona, Utah; the 59-mile, 230-kV high-voltage transmission line between the Windstar substation near Glenrock, Wyoming and the Aeolus substation; and the 290-mile, 500-kV high-voltage transmission line from the Longhorn substation near Boardman, Oregon to the Hemingway substation near Boise, Idaho. Expenditures for these segments totaled $296 million and $35 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals $614 million for the remainder of 2022.

◦Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Expenditures for the expansion program and other growth projects totaled $60 million and $41 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for the expansion program estimated to be placed in-service in 2026-2028 and other growth projects totals $109 million for the remainder of 2022.

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

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

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

◦Construction of solar-powered generating facilities at MidAmerican Energy totaling 141 MWs of small- and utility-scale solar generation, with total spend of $77 million and $63 million for the six-month periods ended June 30, 2022 and 2021, respectively and planned spending of $63 million for the remainder of 2022.

◦Construction of a solar-powered generating facility at Nevada Power totaling $23 million and $5 million for the six-month periods ended June 30, 2022 and 2021, respectively and planned spending of $67 million for the remainder of 2022. Construction includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023.

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

Material Cash Requirements

As of June 30, 2022, there have been no material changes in cash requirements from the information provided in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021, other than those disclosed in Notes 4 and 8 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Quad Cities Generating Station Operating Status

Constellation Energy Corp. ("Constellation Energy," previously Exelon Generation Company, LLC, which was a subsidiary of Exelon Corporation prior to February 1, 2022), the operator of Quad Cities Generating Station Units 1 and 2 ("Quad Cities Station") of which MidAmerican Energy has a 25% ownership interest, announced on June 2, 2016, its intention to shut down Quad Cities Station on June 1, 2018. In December 2016, Illinois passed legislation creating a zero emission standard, which went into effect June 1, 2017. The zero emission standard requires the Illinois Power Agency to purchase ZECs and recover the costs from certain ratepayers in Illinois, subject to certain limitations. The proceeds from the ZECs will provide Constellation Energy additional revenue through 2027 as an incentive for continued operation of Quad Cities Station. MidAmerican Energy will not receive additional revenue from the subsidy.

The PJM Interconnection, L.L.C. ("PJM") capacity market includes a Minimum Offer Price Rule ("MOPR"). If a generation resource is subjected to a MOPR, its offer price in the market is adjusted to effectively remove the revenues it receives through a state government-provided financial support program, resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the PJM MOPR applied only to certain new gas-fired resources. An expanded PJM MOPR to include existing resources would require exclusion of ZEC compensation when bidding into future capacity auctions, resulting in an increased risk of Quad Cities Station not receiving capacity revenues in future auctions.

On December 19, 2019, the FERC issued an order requiring the PJM to broadly apply the MOPR to all new and existing resources, including nuclear. This greatly expanded the breadth and scope of the PJM's MOPR, which became effective as of the PJM's capacity auction for the 2022-2023 planning year in May 2021. While the FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources, such as Quad Cities Station. The FERC provided no new mechanism for accommodating state-supported resources other than the existing Fixed Resource Requirement ("FRR") mechanism under which an entire utility zone would be removed from PJM's capacity auction along with sufficient resources to support the load in such zone. In response to the FERC's order, the PJM submitted a compliance filing on March 18, 2020, wherein the PJM proposed tariff language reflecting the FERC's directives and a schedule for resuming capacity auctions. On April 16, 2020, the FERC issued an order largely denying requests for rehearing of the FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing, which the PJM submitted on June 1, 2020. A number of parties, including Constellation Energy, have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the D.C. Circuit.

As a result, the MOPR applied to Quad Cities Station in the capacity auction for the 2022-2023 planning year, which prevented Quad Cities Station from clearing in that capacity auction.

At the direction of the PJM Board of Managers, the PJM and its stakeholders developed further MOPR reforms to ensure that the capacity market rules respect and accommodate state resource preferences such as the ZEC programs. The PJM filed related tariff revisions at the FERC on July 30, 2021, and, on September 29, 2021, the PJM's proposed MOPR reforms became effective by operation of law. Under the new tariff provisions, the MOPR will no longer apply to Quad Cities Station. Requests for rehearing of the FERC's notice establishing the effective date for the PJM's proposed market reforms were filed in October 2021 and denied by operation of law on November 4, 2021. Several parties have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the Court of Appeals for the Third Circuit. Constellation Energy is strenuously opposing these appeals.

Assuming the continued effectiveness of the Illinois zero emission standard, Constellation Energy no longer considers Quad Cities Station to be at heightened risk for early retirement. However, to the extent the Illinois zero emission standard does not operate as expected over its full term, Quad Cities Station would be at heightened risk for early retirement. The FERC's December 19, 2019 order on the PJM MOPR may undermine the continued effectiveness of the Illinois zero emission standard unless the PJM adopts further changes to the MOPR or Illinois implements an FRR mechanism, under which Quad Cities Station would be removed from the PJM's capacity auction.

Regulatory Matters

BHE's regulated subsidiaries and certain affiliates are subject to comprehensive regulation. The discussion below contains material developments to those matters disclosed in Item 1 of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 and new regulatory matters occurring in 2022.

PacifiCorp

Oregon

In March 2022, PacifiCorp filed a general rate case requesting an overall rate change of $82 million, or 6.6%, to become effective January 1, 2023, that includes cost increases associated with the implementation of PacifiCorp's wildfire mitigation and vegetation management plans. Parties to the case filed testimony in June 2022. PacifiCorp filed reply testimony in July 2022 supporting an overall rate increase of $94 million but proposing that the request be capped at PacifiCorp's original request. A hearing in the rate case will be held in September 2022 with an order expected in December 2022.

In May 2022, PacifiCorp filed its 2021 power cost adjustment mechanism ("PCAM"), which is the first time since the mechanism has been in place that a rate change has been warranted. After consideration of the mechanism's deadband, sharing band and earnings test, PacifiCorp is requesting recovery of $52 million, or a 4.2% increase, to become effective January 1, 2023. This request is incremental to the rate change sought in the general rate case.

In July 2022, PacifiCorp filed an application requesting approval of an automatic adjustment clause with a balancing account to recover costs associated with implementing PacifiCorp's wildfire protection plan in Oregon. Oregon Senate Bill 762 provides for utilities to timely recover these costs through an automatic adjustment clause. The filing requests a rate increase of $20 million, or 1.6%, to recover incremental costs in 2022. While PacifiCorp requested an effective date of August 24, 2022, the OPUC has suspended the filing for further review.

Washington

In June 2021, PacifiCorp filed a power cost only rate case to update baseline net power costs for 2022. PacifiCorp requested a $13 million, or 3.7%, rate increase with an effective date of January 1, 2022. In November 2021, PacifiCorp reached a proposed settlement with most of the parties, which includes an agreement to adjust the PTC rate in base rates and apply a production factor and to include a net power cost update as part of the compliance filing. A hearing was held in January 2022 and the WUTC issued an order approving the settlement in March 2022. A compliance filing reflecting a $43 million, or 12.2%, increase was filed in April 2022 with rates effective May 1, 2022.

In June 2022, PacifiCorp filed its 2021 PCAM and the new tracking mechanism for PTCs approved in the 2021 general rate case. For the 2021 PCAM, PacifiCorp is requesting recovery of $26 million, or a 6.5% increase. PacifiCorp proposed that the 2021 PCAM be amortized over two years, rather than the one-year period required under the current terms of the PCAM. For the new 2021 PTC tracker, PacifiCorp is seeking recovery of $3 million, or an 0.8% increase. Should the WUTC approve the proposal to extend the amortization period of the 2021 PCAM from one to two years, the combined annual increase would be $16 million, or 4.0%, effective January 1, 2023.

California

In May 2022, PacifiCorp filed a general rate case requesting an overall rate change of $28 million, or 25.7%, to become effective January 1, 2023. In June 2022, a proposed procedural schedule was developed that would result in a decision in August 2023.

MidAmerican Energy

South Dakota

In May 2022, MidAmerican Energy filed a request with the South Dakota Public Utilities Commission ("SDPUC") for an increase in its South Dakota retail natural gas rates, which would increase revenue by $7 million annually. If approved, the requested rates would increase retail customers' bills by an average of 6.4%.

Wind PRIME

In January 2022, MidAmerican Energy filed an application with the IUB for advance ratemaking principles for Wind PRIME. If approved, MidAmerican Energy expects to proceed with Wind PRIME, which consists of up to 2,042 MWs of new wind generation and up to 50 MWs of solar generation. If all of Wind PRIME generation is constructed, MidAmerican Energy will own over 9,300 MWs of wind generation and nearly 200 MWs of solar generation. Wind PRIME is projected to allow MidAmerican Energy to generate renewable energy greater than or equal to all of its Iowa retail customers' annual energy needs. MidAmerican Energy secured sufficient safe harbor equipment necessary to remain eligible for 60% PTCs under current tax law. Procedural hearings with the IUB are scheduled to begin in October 2022.

NV Energy (Nevada Power and Sierra Pacific)

Regulatory Rate Review

In June 2022, Sierra Pacific filed a regulatory rate review with the PUCN that requested an annual revenue increase of $88 million, or 9.7%. In addition, a filing was made to revise depreciation rates based on a study, the results of which are reflected in the proposed revenue requirement. An order is expected by the end of 2022 and, if approved, would be effective January 1, 2023.

Senate Bill 448 ("SB 448")

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

ON Line Temporary Rider ("ONTR")

In October 2021, Sierra Pacific filed an application with the PUCN for approval of the ONTR with corresponding updates to its electric rate tariffs to authorize recovery of the One Nevada Transmission Line ("ON Line") regulatory asset being accumulated as a result of the ON Line cost reallocation as well as the related on-going reallocated revenue requirement. Sierra Pacific's application would have, if approved by the PUCN as filed, resulted in a one-time rate increase of $28 million to be collected over a nine-month period starting on April 1, 2022. In March 2022, the PUCN issued an order directing Sierra Pacific to recover $14 million of the ON Line regulatory asset as a one-time rate increase collectable over a nine-month period effective April 1, 2022, with the expected remaining balance at December 31, 2022 to be included in rate base in the 2022 regulatory rate review for inclusion in the rates set in that case.

Merger Application

In March 2022, the Nevada Utilities filed a joint application with the PUCN for authorization to merge Sierra Pacific with and into Nevada Power, with Nevada Power being the surviving entity. If approved by the PUCN as filed, Nevada Power will have two distinct electric service territories in northern and southern Nevada each with their own rates and one natural gas service territory in the Reno and Sparks area. An order is expected in 2022.

Northern Powergrid Distribution Companies

GEMA, through Ofgem, is undertaking its scheduled review of the electricity distribution price control to put in place a new price control at the end of the current period that ends March 2023. The new price control ("ED2") will run for five years from April 2023 to March 2028. In December 2020 and March 2021, GEMA published its decision on the methodology it will use to set ED2. This confirmed that Ofgem will maintain many aspects of the current price control and that the changes being made will generally follow the template that was set by the price controls implemented in April 2021 for transmission and gas distribution in Great Britain. Specific changes include new service standard incentives and mechanisms to adjust cost allowances in specific circumstances, while others will be discontinued, and partially updating the allowed return on equity within the period for changes in the interest rate on government bonds.

In December 2021, Northern Powergrid published and filed its business plan with Ofgem, setting out its detailed approach for 2023-2028 including the cost allowances this approach would require. In June 2022, Ofgem published its draft determinations, which included an allowed cost of equity of 4.75% plus inflation (calculated using the United Kingdom's consumer price index including owner occupiers' housing costs). When placed on a comparable footing, by adjusting for differences in the assumed equity ratio and the measure of inflation used, this working assumption is approximately two percentage points lower than the current cost of equity for electricity distribution. Ofgem's proposals also set out cost allowances and associated expectations. Final values from Ofgem are expected in late 2022.

BHE Pipeline Group

BHE GT&S

In September 2021, EGTS filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective November 1, 2021. EGTS' previous general rate case was settled in 1998. EGTS proposed an annual cost-of-service of approximately $1.1 billion, and requested increases in various rates, including general system storage rates by 85% and general system transportation rates by 60%. In October 2021, the FERC issued an order that accepted the November 1, 2021 effective date for certain changes in rates, while suspending the other changes for five months following the proposed effective date, until April 1, 2022, subject to refund and the outcome of hearing procedures. In June 2022, the parties reached an agreement in principle and the litigation procedural schedule was ordered held in abeyance for 90 days to enable the parties to finalize a settlement. The settlement is expected to be filed by September 30, 2022. As of June 30, 2022, EGTS' provision for rate refund for April 2022 through June 2022 totaled $35 million and was included in other current liabilities on the Consolidated Balance Sheet.

Northern Natural Gas

In July 2022, Northern Natural Gas filed a general rate case that proposed an overall annual cost-of-service of $1.3 billion. This is an increase of $323 million above the cost of service filed in its 2019 rate case of $1.0 billion. Depreciation on increased rate base and an increase in depreciation and negative salvage rates account for $115 million of the $323 million increase in the filed cost of service. Northern Natural Gas has requested increases in various rates, including transportation reservation rates ranging from approximately 45% in the Field Area to 120% in the Market Area to be implemented, subject to refund, on August 1, 2022. In July 2022, the FERC issued an order that suspended the rates proposed for five months following the proposed effective date, until January 1, 2023, subject to refund and the outcome of hearing procedures.

BHE Transmission

AltaLink

2022-2023 General Tariff Application

In April 2021, AltaLink filed its 2022-2023 GTA delivering on the last two years of its commitment to keep rates flat for customers at or below the 2018 level of C$904 million for the five-year period from 2019 to 2023. The two-year application achieves flat tariffs by continuing to transition to the AUC-approved salvage recovery method and continuing the use of the flow-through income tax method, with an overall year-over-year increase of approximately 2% in 2022 and 2023 revenue requirements. The application requested the approval of transmission tariffs of C$824 million and C$847 million for 2022 and 2023, respectively. In September 2021, AltaLink provided responses to information requests from the AUC and filed an amended application to reflect certain adjustments and forecast updates. In November 2021, the AUC approved the 2022 interim refundable transmission tariff at C$57 million per month effective January 2022.

In January 2022, the AUC issued its decision with respect to AltaLink's 2022-2023 GTA. AltaLink's 2022-2023 GTA reflected its continued commitment to provide rate stability to customers by maintaining flat tariffs and providing additional tariff relief measures, including a proposed tariff refund of C$60 million of accumulated depreciation in each of 2022 and 2023. The AUC did not approve AltaLink's proposed refund due to an anticipated improvement in general economic conditions in Alberta. In March 2022, AltaLink filed a review and variance application requesting the AUC to review and vary its decision to deny AltaLink's proposed C$120 million refund of accumulated depreciation surplus, given material changes in circumstances since the decision was issued in January 2022. In May 2022, the AUC issued a decision with respect to AltaLink's application to review and vary its proposed $120 million refund of accumulated depreciation surplus. The AUC found that a material decline in Alberta's economic circumstances is not sufficient evidence to warrant the refund. In May 2022, the AUC approved AltaLink's revised total 2022 and 2023 revenue requirement of C$879 million and C$883 million, respectively, allowing AltaLink to fully deliver on its flat-for-five commitment to customers.

2023 Generic Cost of Capital Proceeding

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

Environmental Laws and Regulations

Each Registrant is subject to federal, state, local and foreign laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact each Registrant's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state, local and international agencies. Each Registrant believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. The discussion below contains material developments to those matters disclosed in Item 1 of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2021, and new environmental matters occurring in 2022.

Climate Change

Affordable Clean Energy Rule

In June 2014, the EPA released proposed regulations to address greenhouse gas emissions from existing fossil-fueled generating facilities, referred to as the Clean Power Plan, under Section 111(d) of the Clean Air Act. The EPA's proposal calculated state-specific emission rate targets to be achieved based on the "best system of emission reduction." In August 2015, the final Clean Power Plan was released, which established the best system of emission reduction as including: (a) heat rate improvements; (b) increased utilization of existing combined-cycle natural gas-fueled generating facilities; and (c) increased deployment of new and incremental non-carbon generation placed in-service after 2012. The Clean Power Plan was stayed by the United States Supreme Court in February 2016 while litigation proceeded. On June 19, 2019, the EPA repealed the Clean Power Plan and issued the Affordable Clean Energy rule. In the Affordable Clean Energy rule, the EPA determined that the best system of emission reduction for existing coal-fueled generating facilities is limited to actions that can be taken at a point source facility, specifically heat rate improvements, and identified a set of candidate technologies and measures that could improve heat rates. Measures taken to meet the standards of performance must be achieved at the source itself. The Affordable Clean Energy rule was challenged by environmental and health groups in the D.C. Circuit. On January 19, 2021, the D.C. Circuit vacated and remanded the Affordable Clean Energy rule to the EPA, finding that the rule "rested critically on a mistaken reading of the Clean Air Act" that limited the best system of emission reduction to actions taken at a facility. In October 2021, the United States Supreme Court agreed to hear an appeal of that decision. Arguments in the case were held February 28, 2022, and on June 30, 2022, the United States Supreme Court issued its decision regarding the scope of the EPA's authority to regulate greenhouse gas emissions under the Clean Air Act. The United States Supreme Court held that the "generation shifting" approach in the Clean Power Plan exceeded the powers granted to the EPA by Congress, although the court did not address whether the EPA may only adopt measures applied at the individual source as it did in the Affordable Clean Energy rule. A key area where the EPA went astray was using the Clean Power Plan to give states the option to promulgate regulations that would encourage "generation shifting," or moving away from higher-polluting power sources like coal to lower-polluting sources like natural gas or renewables. The United States Supreme Court found that type of regulation, which would impact larger economic forces beyond the fence lines of individual generating facilities, is not permitted under Section 111(d) of the Clean Air Act. The United States Supreme Court reversed the D.C. Circuit's vacatur of the Affordable Clean Energy rule and remanded the case for further proceedings. The ruling has no immediate impact on the Registrants, as there is no Section 111(d) rule currently in effect. The Biden administration plans to propose by March 2023 its own rule to replace the Clean Power Plan and Affordable Clean Energy rule.

Clean Air Act Regulations

The Clean Air Act is a federal law administered by the EPA that provides a framework for protecting and improving the nation's air quality and controlling sources of air emissions. The implementation of new standards is generally outlined in SIPs, which are a collection of regulations, programs and policies to be followed. SIPs vary by state and are subject to public hearings and EPA approval. Some states may adopt additional or more stringent requirements than those implemented by the EPA. The major Clean Air Act programs most directly affecting the Registrants' operations are described below.

National Ambient Air Quality Standards

Under the authority of the Clean Air Act, the EPA sets minimum NAAQS for six principal pollutants, consisting of carbon monoxide, lead, NOx, particulate matter, ozone and SO2, considered harmful to public health and the environment. Areas that achieve the standards, as determined by ambient air quality monitoring, are characterized as being in attainment, while those that fail to meet the standards are designated as being nonattainment areas. Generally, sources of emissions in a nonattainment area that are determined to contribute to the nonattainment are required to reduce emissions. Currently, with the exceptions described in the following paragraphs, air quality monitoring data indicates that all counties where the relevant Registrant's major emission sources are located are in attainment of the current NAAQS.

On June 4, 2018, the EPA published final ozone designations for much of the U.S. Relevant to the Registrants, these designations include classifying Yuma County, Arizona; Clark County, Nevada; and the Northern Wasatch Front, Southern Wasatch Front and Duchesne and Uintah counties in Utah as nonattainment-marginal with the 2015 ozone standard. These areas were required to meet the 2015 standard three years from the August 3, 2018, effective date. All other areas relevant to the Registrants were designated attainment/unclassifiable with this same action. However, on January 29, 2021, the D.C. Circuit vacated several provisions of the 2018 implementing rules for the 2015 ozone standards for contravening the Clean Air Act. The EPA and environmental groups finalized a consent decree in January 2022 that sets deadlines for the agency to approve or disapprove the "good neighbor" provisions of interstate ozone plans of dozens of states. Relevant to the Registrants, the EPA must, by April 30, 2022, propose to approve or disapprove the interstate ozone SIPs of Alabama, Iowa, Maryland, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas, West Virginia and Wisconsin. On February 22, 2022, the EPA published a series of proposed decisions to disapprove the SIPs for interstate ozone transport of 19 states. Relevant to the Registrants, these states include Alabama, Maryland, Michigan, Minnesota, New York, Ohio, West Virginia and Wisconsin. The EPA also proposed to approve Iowa's SIP after re-analyzing the state's data. The EPA must finalize the proposed rules by December 15, 2022. In addition, the EPA must, by December 15, 2022, approve or disapprove the interstate plans of Arizona, California, Nevada and Wyoming. On April 15, 2022, the EPA issued its final rule approving Iowa's SIP as meeting the good neighbor provisions for the 2015 ozone standard. On May 24, 2022, the EPA disapproved the Utah and Wyoming interstate ozone SIPs. Until the EPA takes final action consistent with this decree, additional impacts to the relevant Registrants cannot be determined.

Separately, on March 28, 2022, the EPA proposed determinations as to whether certain areas have achieved levels of ground-level ozone pollution that meet the 2008 and 2015 ozone NAAQS. Relevant to the Registrants, the Southern Wasatch Front in Utah and Yuma, Arizona are proposed to have met the 2015 ozone standard; and the Cincinnati area of Ohio and Kentucky and the Northern Wasatch Front in Utah are proposed to have not met the 2015 ozone, will be reclassified as Moderate Non-Attainment, and will have until August 3, 2024 to meet the standard. Until the EPA takes final action on the proposal and the affected states submit any required SIPs, the relevant Registrants cannot determine the impacts of the proposed rule.

Cross-State Air Pollution Rule

The EPA promulgated an initial rule in March 2005 to reduce emissions of NOx and SO2, precursors of ozone and particulate matter, from down-wind sources in the eastern U.S., including Iowa, to reduce emissions by implementing a plan based on a market-based cap-and-trade system, emissions reductions, or both. After numerous appeals, the CSAPR was promulgated to address interstate transport of SO2 and NOx emissions in 27 eastern and Midwestern states.

The first phase of the rule was implemented January 1, 2015. In November 2015, the EPA released a proposed rule that would further reduce NOx emissions in 2017. The final "CSAPR Update Rule" was published in the Federal Register in October 2016 and required additional reductions in NOx emissions beginning in May 2017. On December 6, 2018, the EPA finalized a rule to close out the CSAPR, having determined that the CSAPR Update Rule for the 2008 ozone NAAQS fully addressed Clean Air Act interstate transport obligations of 20 eastern states. The EPA determined that 2023 is an appropriate future analytic year to evaluate remaining good neighbor obligations and that there will be no remaining nonattainment or maintenance receptors with respect to the 2008 ozone NAAQS in the eastern U.S. in that year. Accordingly, the 20 CSAPR Update-affected states would not contribute significantly to nonattainment in, or interfere with maintenance of, any other state with regard to the 2008 ozone NAAQS. Both the CSAPR Update and the CSAPR Close-Out rules were challenged in the D.C. Circuit. The D.C. Circuit ruled September 13, 2019, that because the EPA allowed upwind states to continue to significantly contribute to downwind air quality problems beyond statutory deadlines, the CSAPR Update Rule provided only a partial remedy that did not fully address interstate ozone transport, and remanded the CSAPR Update Rule back to the EPA. The D.C. Circuit issued an opinion October 1, 2019, finding that because the CSAPR Close-Out Rule relied on the same faulty reasoning as the CSAPR Update Rule, the CSAPR Close-Out Rule must be vacated. On October 15, 2020, the EPA proposed to tighten caps on emissions of NOx from generating facilities in 12 states in the CSAPR trading program in response to the D.C. Circuit's decision to vacate the CSAPR Update Rule. The rule is intended to fully resolve 21 upwind states' remaining good neighbor obligations under the 2008 ozone NAAQS. Additional emissions reductions are required at generating facilities in 12 states, including Illinois; the EPA predicts that emissions from the remaining nine states, including Iowa and Texas, will not significantly contribute to downwind states' ability to attain or maintain the ozone standard. The EPA accepted comment on the proposal through December 15, 2020. On March 15, 2021, the EPA finalized the Revised CSAPR Update Rule largely as proposed. Significant new compliance obligations are not anticipated as a result of the rule. In June 2021, a new lawsuit was filed that challenges the Revised CSAPR Update Rule. Litigation is ongoing in the D.C. Circuit Court. Until litigation is exhausted, the relevant Registrants cannot determine whether additional action may be required.

In March 2022, the EPA released its Good Neighbor Rule, which contains proposed revisions to the CSAPR framework and is intended to address ozone transport for the 2015 ozone NAAQS. The rule focuses on reductions of NOx, precursors to ozone formation and covers 26 states. Relevant to the Registrants, four states are included in the cross-state program for the first time - California, Nevada, Utah and Wyoming. Iowa is not included in the proposal. In a separate but related action in February 2022, the EPA proposed to approve the good neighbor provisions of Iowa's SIP addressing ozone transport and the 2015 ozone standard. The EPA proposes to retain emissions allowance trading for generating facilities. Beginning in 2023, emissions budgets would be set at the level of reductions achievable through immediately available measures such as consistently operating existing emissions controls. Starting in 2026, emissions budgets would be set at levels achievable by the installation of SCR controls at certain generating facilities. The proposal also includes additional industries beyond the power sector for the first time, with a focus on the top NOx emitting stationary source categories. These include natural gas pipeline compressor stations, pulp and paper mills, cement production, iron and steel boilers and furnaces, glass furnaces, chemical manufacturing and petroleum and coal product manufacturing. These sources will not have access to trading and will instead be subject to rate-based limits that are assigned for each source category. The EPA accepted comments on the proposal through June 21, 2022. Until the EPA takes final action consistent with this decree, impacts to the relevant Registrants cannot be determined.

Regional Haze

The EPA's Regional Haze Rule, finalized in 1999, requires states to develop and implement plans to improve visibility in designated federally protected areas ("Class I areas"). Some of PacifiCorp's coal-fueled generating facilities in Utah, Wyoming, Arizona and Colorado and certain of Nevada Power's and Sierra Pacific's fossil-fueled generating facilities are subject to the Clean Air Visibility Rules. In accordance with the federal requirements, states are required to submit SIPs that address emissions from sources subject to BART requirements and demonstrate progress towards achieving natural visibility requirements in Class I areas by 2064.

The state of Utah issued a regional haze SIP requiring the installation of SO2, NOx and particulate matter controls on Hunter Units 1 and 2 and Huntington Units 1 and 2. In December 2012, the EPA approved the SO2 portion of the Utah regional haze SIP and disapproved the NOx and particulate matter portions. Subsequently, the Utah Division of Air Quality completed an alternative BART analysis for Hunter Units 1 and 2 and Huntington Units 1 and 2. In January 2016, the EPA published two alternative proposals to either approve the Utah SIP as written or reject the Utah SIP relating to NOx controls and require the installation of SCR equipment at Hunter Units 1 and 2 and Huntington Units 1 and 2 within five years. The EPA's final action on the Utah regional haze SIP was effective August 4, 2016. The EPA approved in part and disapproved in part the Utah regional haze SIP and issued a FIP requiring the installation of SCR equipment at Hunter Units 1 and 2 and Huntington Units 1 and 2 within five years of the effective date of the rule. PacifiCorp and other parties filed requests with the EPA to reconsider and stay that decision, as well as filed motions for stay and petitions for review with the Tenth Circuit Court of Appeals ("Tenth Circuit") asking the court to overturn the EPA's actions. In July 2017, the EPA issued a letter indicating it would reconsider its FIP decision. In light of the EPA's grant of reconsideration and the EPA's position in the litigation, the Tenth Circuit held the litigation in abeyance and imposed a stay of the compliance obligations of the FIP for the number of days the stay is in effect while the EPA conducts its reconsideration process. To support the reconsideration, PacifiCorp undertook additional air quality modeling using the Comprehensive Air Quality Model with Extensions dispersion model. On January 14, 2019, the state of Utah submitted a SIP revision to the EPA, which includes the updated modeling information and additional analysis. On June 24, 2019, the Utah Air Quality Board unanimously voted to approve the Utah regional haze SIP revision, which incorporates a BART alternative into Utah's regional haze SIP. The BART alternative makes the shutdown of PacifiCorp's Carbon generating facility enforceable under the SIP and removes the requirement to install SCR equipment on Hunter Units 1 and 2 and Huntington Units 1 and 2. The Utah Division of Air Quality submitted the SIP revision to the EPA for approval at the end of 2019. In January 2020, the EPA published its proposed approval of the Utah Regional Haze SIP Alternative, which makes the shutdown of the Carbon generating facility federally enforceable and adopts as BART the existing NOx controls and emission limits on the Hunter and Huntington generating facilities. The proposed approval withdraws the FIP requirements to install SCR equipment on Hunter Units 1 and 2 and Huntington Units 1 and 2. The EPA released the final rule approving the Utah Regional Haze SIP Alternative on October 28, 2020. With the approval, the EPA also finalized its withdrawal of the FIP requirements for the Hunter and Huntington generating facilities. The Utah Regional Haze SIP Alternative took effect December 28, 2020. As a result of these actions, the Tenth Circuit dismissed the Utah regional haze petitions on January 11, 2021. On January 19, 2021, Heal Utah, National Parks Conservation Association, Sierra Club and Utah Physicians for a Healthy Environment filed a petition for review of the Utah Regional Haze SIP Alternative in the Tenth Circuit. PacifiCorp and the state of Utah moved to intervene in the litigation. After review of the rule by the Biden administration, the EPA determined it would defend the rule, and briefing in the case is ongoing. A date for oral arguments has not been scheduled. The Utah Air Quality Board approved the Utah Division of Air Quality's SIP for the regional haze second planning period on April 6, 2022. The public comment period is anticipated to begin in early May 2022. The proposed plan sets mass-based emissions limits for PacifiCorp's Hunter and Huntington generating facilities to ensure reasonable visibility progress for the second planning period. The division proposes to add existing SO2 emission limits for all five Hunter and Huntington units as enforceable regional haze controls. The division also proposes new enforceable mass-based NOx emission limits for both generating facilities based on actual emissions. The state is on track to submit a final implementation plan to the EPA in August 2022.

The state of Wyoming issued two regional haze SIPs requiring the installation of SO2, NOx and particulate matter controls on certain PacifiCorp coal-fueled generating facilities in Wyoming. The EPA approved the SO2 SIP in December 2012 and the EPA's approval was upheld on appeal by the Tenth Circuit in October 2014. In addition, the EPA initially proposed in June 2012 to disapprove portions of the NOx and particulate matter SIP and instead issue a FIP. The EPA withdrew its initial proposed actions on the NOx and particulate matter SIP and the proposed FIP, published a re-proposed rule in June 2013, and finalized its determination in January 2014, which aligns more closely with the SIP proposed by the state of Wyoming. The EPA's final action on the Wyoming SIP approved the state's plan to have PacifiCorp install low-NOx burners at Naughton Units 1 and 2, SCR controls at Naughton Unit 3 by December 2014, SCR controls at Jim Bridger Units 1 through 4 between 2015 and 2022, and low-NOx burners at Dave Johnston Unit 4. The EPA disapproved a portion of the Wyoming SIP and issued a FIP for Dave Johnston Unit 3, where it required the installation of SCR controls by 2019 or, in lieu of installing SCR controls, a commitment to shut down Dave Johnston Unit 3 by 2027, its currently approved depreciable life. The EPA also disapproved a portion of the Wyoming SIP and issued a FIP for the Wyodak coal-fueled generating facility, requiring the installation of SCR controls within five years (i.e., by 2019). The EPA action became final on March 3, 2014. PacifiCorp filed an appeal of the EPA's final action on Wyodak in March 2014. The state of Wyoming also filed an appeal of the EPA's final action, as did the Powder River Basin Resource Council, National Parks Conservation Association and Sierra Club. In September 2014, the Tenth Circuit issued a stay of the March 2019 compliance deadline for Wyodak, pending further action by the Tenth Circuit in the appeal. The EPA, U.S. Department of Justice, state of Wyoming and PacifiCorp executed a settlement agreement December 16, 2020, removing the requirement to install SCR in lieu of monthly and annual NOx emissions limits. The settlement agreement was subject to a comment period which ended July 6, 2021. Litigation in the Tenth Circuit remains stayed pending finalization of the settlement agreement. The EPA did not proceed with final approval of the settlement agreement for Wyodak and is currently engaged with Wyoming and PacifiCorp concerning alternative paths for resolution. On February 5, 2019, PacifiCorp submitted a reasonable progress reassessment permit application and reasonable progress determination for Jim Bridger Units 1 and 2, seeking a rescission of the December 2017 permit requiring the installation of SCR, to be replaced with a permit imposing plant-wide emission limits to achieve better modeled visibility, fewer overall environmental impacts and lower costs of compliance. In May 2020, the Wyoming Air Quality Division issued a permit approving PacifiCorp's monthly and annual NOx and SO2 emission limits on the four Jim Bridger units and submitted a regional haze SIP revision to the EPA. The revised SIP would grant approval of PacifiCorp's Jim Bridger reasonable progress reassessment application and incorporates PacifiCorp's proposed emission limits in lieu of the requirement to install SCR systems on Jim Bridger Units 1 and 2. On December 27, 2021, Wyoming's governor issued an emergency suspension order under Section 110(g) of the Clean Air Act, allowing the operation of Jim Bridger Unit 2 through April 30, 2022, while the state, the EPA and PacifiCorp continue settlement discussions. On January 18, 2022, the EPA proposed to reject the SIP revisions. The EPA took comment on the proposal through February 17, 2022. On February 14, 2022, the First Judicial District Court for the State of Wyoming entered a consent decree reached between the state of Wyoming and PacifiCorp under Sections 201 and 209(a) of the Wyoming Environmental Quality Act, resolving claims of threatened violations of the Clean Air Act, the Wyoming Environmental Quality Act and the Wyoming Air Quality Standards and Regulations at the Jim Bridger facility. No penalties were imposed under the consent decree. Consistent with the terms and conditions of the consent decree and as forecasted in PacifiCorp's 2021 IRP, PacifiCorp must convert both units to natural gas and begin meeting emissions limits consistent with that conversion by January 1, 2024. In addition, PacifiCorp must propose an RFP by January 1, 2023, for carbon capture technology at Jim Bridger Units 3 and 4. Wyoming issued its proposed implementation plan for second planning period reasonable progress on February 18, 2022 and accepted comments through March 23, 2022. The EPA and PacifiCorp executed an administrative order on consent June 9, 2022, covering compliance for Jim Bridger Units 1 and 2 under the regional haze rule. The federal order contains the same emission and operating limits as the Wyoming consent decree and adds federal approval of the compliance pathway outlined in the state consent decree, including revision of the SIP to include conversion of Jim Bridger Units 1 and 2 to natural gas. The order includes a one-year deadline to complete the SIP revision. The proposed SIP revision reflecting these agreements is currently being evaluated under parallel processes by the state of Wyoming and the EPA. The Wyoming Department of Environmental Quality submitted the Jim Bridger Units 1 and 2 proposed SIP revision to federal land managers for a 60-day consultation on June 7, 2022. The federal land managers must complete review and provide comments by August 8, 2022. For the second round of regional haze planning, Wyoming determined that no controls will be necessary on any Wyoming resources to make reasonable progress. It is estimated that the state will submit a final state-approved implementation plan to the EPA in August 2022.

In February 2022, NV Energy received 30-day notice letters from the Nevada Division of Environmental Protection regarding the reopening and revision of the Valmy and Tracy Generating Station's Title V air quality operating permits to add federally enforceable retirement dates of December 31, 2028 for Valmy Units 1 and 2 and December 31, 2031 for Tracy Unit 4. The enforceable retirement dates will implement Nevada's SIP for the regional haze second planning period. The revised permits were received in March and April 2022. The Nevada Division of Environmental Protection accepted public comment on its SIP through July 25, 2022, and is on track to submit the final SIP to the EPA in August 2022.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, impairment of goodwill and long-lived assets, pension and other postretirement benefits, income taxes and revenue recognition - unbilled revenue. For additional discussion of the Company's critical accounting estimates, see Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in the Company's assumptions regarding critical accounting estimates since December 31, 2021.

PacifiCorp and its subsidiaries

Consolidated Financial Section

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

PacifiCorp

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of PacifiCorp and subsidiaries ("PacifiCorp") as of June 30, 2022, the related consolidated statements of operations and changes in shareholders' equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of PacifiCorp as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

/s/ Deloitte & Touche LLP

Portland, Oregon

August 5, 2022

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	390	$	179
Trade receivables, net	730		725
Other receivables, net	49		52
Inventories	490		474
Derivative contracts	127		76

Regulatory assets	150		65

Other current assets	83		150
Total current assets	2,019		1,721

Property, plant and equipment, net	23,414		22,914
Regulatory assets	1,257		1,287
Other assets	750		534

Total assets	$	27,440	$	26,456

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	848	$	680
Accrued interest	122		121
Accrued property, income and other taxes	189		78

Accrued employee expenses	117		89

Current portion of long-term debt	455		155
Regulatory liabilities	115		118
Other current liabilities	195		219
Total current liabilities	2,041		1,460

Long-term debt	8,268		8,575
Regulatory liabilities	2,833		2,650
Deferred income taxes	2,908		2,847
Other long-term liabilities	1,364		1,011
Total liabilities	17,414		16,543

Commitments and contingencies (Note 9)

Shareholders' equity:
Preferred stock	2		2
Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	—		—
Additional paid-in capital	4,479		4,479
Retained earnings	5,561		5,449
Accumulated other comprehensive loss, net	(16)		(17)
Total shareholders' equity	10,026		9,913

Total liabilities and shareholders' equity	$	27,440	$	26,456

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Operating revenue	$	1,314	$	1,298	$	2,611	$	2,540

Operating expenses:
Cost of fuel and energy	451		441		916		865
Operations and maintenance	375		255		652		514
Depreciation and amortization	279		275		559		539
Property and other taxes	51		43		110		104
Total operating expenses	1,156		1,014		2,237		2,022

Operating income	158		284		374		518

Other income (expense):
Interest expense	(107)		(105)		(213)		(212)
Allowance for borrowed funds	6		6		12		12
Allowance for equity funds	15		12		28		25
Interest and dividend income	7		5		14		11
Other, net	(5)		4		(9)		10
Total other income (expense)	(84)		(78)		(168)		(154)

Income before income tax benefit	74		206		206		364
Income tax benefit	(8)		(19)		(6)		(30)
Net income	$	82	$	225	$	212	$	394

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

(Amounts in millions)


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

Balance, March 31, 2021	$	2	$	—	$	4,479	$	4,880	$	(19)	$	9,342
Net income	—		—		—		225		—		225


Balance, June 30, 2021	$	2	$	—	$	4,479	$	5,105	$	(19)	$	9,567

Balance, December 31, 2020	$	2	$	—	$	4,479	$	4,711	$	(19)	$	9,173
Net income	—		—		—		394		—		394


Balance, June 30, 2021	$	2	$	—	$	4,479	$	5,105	$	(19)	$	9,567

Balance, March 31, 2022	$	2	$	—	$	4,479	$	5,579	$	(16)	$	10,044
Net income	—		—		—		82		—		82

Common stock dividends declared	—		—		—		(100)		—		(100)
Balance, June 30, 2022	$	2	$	—	$	4,479	$	5,561	$	(16)	$	10,026

Balance, December 31, 2021	$	2	$	—	$	4,479	$	5,449	$	(17)	$	9,913
Net income	—		—		—		212		—		212
Other comprehensive income	—		—		—		—		1		1
Common stock dividends declared	—		—		—		(100)		—		(100)
Balance, June 30, 2022	$	2	$	—	$	4,479	$	5,561	$	(16)	$	10,026

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	212	$	394
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	559		539
Allowance for equity funds	(28)		(25)
Changes in regulatory assets and liabilities	(76)		(98)
Deferred income taxes and amortization of investment tax credits	29		22
Other, net	12		(1)
Changes in other operating assets and liabilities:
Trade receivables, other receivables and other assets	(142)		(10)
Inventories	(16)		8
Derivative collateral, net	69		35

Accrued property, income and other taxes, net	152		79
Accounts payable and other liabilities	442		103
Net cash flows from operating activities	1,213		1,046

Cash flows from investing activities:
Capital expenditures	(894)		(819)
Other, net	6		—
Net cash flows from investing activities	(888)		(819)

Cash flows from financing activities:

Repayments of long-term debt	(9)		(400)
Net proceeds from short-term debt	—		208

Dividends paid	(100)		—
Other, net	(2)		(4)
Net cash flows from financing activities	(111)		(196)

Net change in cash and cash equivalents and restricted cash and cash equivalents	214		31
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	186		19
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	400	$	50

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

PACIFICORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2022 and for the three- and six-month periods ended June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income materially equals comprehensive income for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022 and 2021 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in PacifiCorp's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022, other than the updates associated with PacifiCorp's estimates of loss contingencies related to the Oregon and California 2020 wildfires (the "2020 Wildfires") as discussed in Note 9.

(2) Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds representing vendor retention, nuclear decommissioning and custodial funds. Restricted amounts are included in other current assets and other assets on the Consolidated Balance Sheets. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021
Cash and cash equivalents	$	390	$	179
Restricted cash and cash equivalents included in other current assets	7		4
Restricted cash included in other assets	3		3
Total cash and cash equivalents and restricted cash and cash equivalents	$	400	$	186

(3) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
		June 30,		December 31,
	Depreciable Life	2022		2021
Utility Plant:
Generation	15 - 59 years	$	13,770	$	13,679
Transmission	60 - 90 years	7,952		7,894
Distribution	20 - 75 years	8,211		8,044
Intangible plant(1)	5 - 75 years	1,114		1,106
Other	5 - 60 years	1,584		1,539
Utility plant in-service		32,631		32,262
Accumulated depreciation and amortization		(10,874)		(10,507)
Utility plant in-service, net		21,757		21,755
Other non-regulated, net of accumulated depreciation and amortization	14 - 95 years	18		18
Plant, net		21,775		21,773
Construction work-in-progress		1,639		1,141
Property, plant and equipment, net		$	23,414	$	22,914

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

(4) Recent Financing Transactions

Credit Facilities

Common Shareholders' Equity

In May 2022, PacifiCorp declared a common stock dividend of $100 million, paid in June 2022, to PPW Holdings LLC.

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	4		4		3		4
Federal income tax credits	(25)		(19)		(21)		(19)
Effects of ratemaking(1)	(13)		(15)		(11)		(14)

Valuation allowance	—		—		4		—
Other	2		—		1		—
Effective income tax rate	(11)	%	(9)	%	(3)	%	(8)	%

(1)Effects of ratemaking is primarily attributable to activity associated with excess deferred income taxes.

Income tax credits relate primarily to production tax credits ("PTCs") earned by PacifiCorp's wind-powered generating facilities. Federal renewable electricity PTCs are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the three-month periods ended June 30, 2022 and 2021 totaled $18 million and $40 million, respectively. PTCs for the six-month periods ended June 30, 2022 and 2021 totaled $44 million and $71 million, respectively.

For the six-month period ended June 30, 2022 PacifiCorp recorded a valuation allowance related to state net operating loss carryforwards.

Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, PacifiCorp's provision for federal and state income tax has been computed on a stand-alone basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. For the six-month periods ended June 30, 2022 and 2021, PacifiCorp received net cash payments for federal and state income tax from BHE totaling $150 million and $93 million, respectively.

(6) Employee Benefit Plans

Net periodic benefit cost (credit) for the pension and other postretirement benefit plans included the following components (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Pension:
Service cost	$	—	$	—	$	—	$	—
Interest cost	7		7		14		14
Expected return on plan assets	(11)		(14)		(21)		(27)

Net amortization	4		5		8		10
Net periodic benefit cost (credit)	$	—	$	(2)	$	1	$	(3)

Other postretirement:
Service cost	$	1	$	1	$	1	$	1
Interest cost	2		2		4		4
Expected return on plan assets	(3)		(2)		(5)		(4)
Net amortization	—		—		—		—
Net periodic benefit cost (credit)	$	—	$	1	$	—	$	1

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the pension and other postretirement benefit plans are expected to be $4 million and $— million, respectively, during 2022. As of June 30, 2022, $2 million of contributions had been made to the pension plans.

(7) Risk Management and Hedging Activities

PacifiCorp is exposed to the impact of market fluctuations in commodity prices and interest rates. PacifiCorp is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk as it has an obligation to serve retail customer load in its service territories. PacifiCorp's load and generating facilities represent substantial underlying commodity positions. Exposures to commodity prices consist mainly of variations in the price of fuel required to generate electricity and wholesale electricity that is purchased and sold. Commodity prices are subject to wide price swings as supply and demand are impacted by, among many other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage, and transmission and transportation constraints. Interest rate risk exists on variable-rate debt and future debt issuances. PacifiCorp does not engage in a material amount of proprietary trading activities.

PacifiCorp has established a risk management process that is designed to identify, assess, manage and report on each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, PacifiCorp uses commodity derivative contracts, which may include forwards, futures, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. PacifiCorp manages its interest rate risk by limiting its exposure to variable interest rates primarily through the issuance of fixed-rate long-term debt and by monitoring market changes in interest rates. Additionally, PacifiCorp may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate PacifiCorp's exposure to interest rate risk. No interest rate derivatives were in place during the periods presented. PacifiCorp does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in PacifiCorp's accounting policies related to derivatives. Refer to Note 8 for additional information on derivative contracts.

The following table, which reflects master netting arrangements and excludes contracts that have been designated as normal under the normal purchases or normal sales exception afforded by GAAP, summarizes the fair value of PacifiCorp's derivative contracts, on a gross basis, and reconciles those amounts to the amounts presented on a net basis on the Consolidated Balance Sheets (in millions):


	Derivative
	Contracts -				Other		Other
	Current		Other		Current		Long-term
	Assets		Assets		Liabilities		Liabilities		Total
As of June 30, 2022
Not designated as hedging contracts(1):
Commodity assets	$	183	$	80	$	9	$	—	$	272
Commodity liabilities	(1)		—		(44)		(4)		(49)
Total	182		80		(35)		(4)		223

Total derivatives	182		80		(35)		(4)		223
Cash collateral payable	(55)		(9)		—		—		(64)
Total derivatives - net basis	$	127	$	71	$	(35)	$	(4)	$	159

As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets	$	81	$	21	$	2	$	—	$	104
Commodity liabilities	(5)		(1)		(38)		(7)		(51)
Total	76		20		(36)		(7)		53

Total derivatives	76		20		(36)		(7)		53
Cash collateral receivable	—		—		5		—		5
Total derivatives - net basis	$	76	$	20	$	(31)	$	(7)	$	58

(1)PacifiCorp's commodity derivatives are generally included in rates. As of June 30, 2022 a regulatory liability of $223 million was recorded related to the net derivative asset of $223 million. As of December 31, 2021 a regulatory liability of $53 million was recorded related to the net derivative asset of $53 million.

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Beginning balance	$	(195)	$	—	$	(53)	$	17
Changes in fair value recognized in regulatory assets	(49)		(102)		(217)		(119)
Net losses reclassified to operating revenue	(8)		(5)		(11)		(5)
Net gains reclassified to energy costs	29		5		58		5
Ending balance	$	(223)	$	(102)	$	(223)	$	(102)

Derivative Contract Volumes

The following table summarizes the net notional amounts of outstanding commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of (in millions):


	Unit of	June 30,	December 31,
	Measure	2022	2021

Electricity purchases, net	Megawatt hours	2	2
Natural gas purchases	Decatherms	105	106

Credit Risk

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

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in PacifiCorp's creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2022, PacifiCorp's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.

The aggregate fair value of PacifiCorp's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $47 million and $37 million as of June 30, 2022 and December 31, 2021, respectively, for which PacifiCorp had posted collateral of $— million and $5 million, respectively, in the form of cash deposits. If all credit-risk-related contingent features for derivative contracts in liability positions had been triggered as of June 30, 2022 and December 31, 2021, PacifiCorp would have been required to post $33 million and $23 million, respectively, of additional collateral. PacifiCorp's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation or other factors.

(8) Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of June 30, 2022:
Assets:
Commodity derivatives	$	—	$	272	$	—	$	(74)	$	198
Money market mutual funds	374		—		—		—		374
Investment funds	26		—		—		—		26
	$	400	$	272	$	—	$	(74)	$	598

Liabilities - Commodity derivatives	$	—	$	(49)	$	—	$	10	$	(39)

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)

(1)Represents netting under master netting arrangements and a net cash collateral payable of $64 million and a net cash collateral receivable of $5 million as of June 30, 2022 and December 31, 2021, 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 7 for further discussion regarding PacifiCorp's risk management and hedging activities.

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

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


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	8,723	$	8,555	$	8,730	$	10,374

(9) Commitments and Contingencies

Construction Commitments

Fuel Contracts

During the six-month period ended June 30, 2022, PacifiCorp entered into certain coal supply and transportation agreements totaling approximately $200 million through 2024.

Legal Matters

PacifiCorp is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. PacifiCorp does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. PacifiCorp is also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines, penalties and other costs in substantial amounts and are described below.

2020 Wildfires

Environmental Laws and Regulations

PacifiCorp is subject to federal, state and local laws and regulations regarding air and water quality, renewable portfolio standards, emissions performance standards, climate change, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact PacifiCorp's current and future operations. PacifiCorp believes it is in material compliance with all applicable laws and regulations.

Hydroelectric Relicensing

PacifiCorp is a party to the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended to resolve disputes surrounding PacifiCorp's efforts to relicense the Klamath Hydroelectric Project. The KHSA establishes a process for PacifiCorp, the states of Oregon and California ("States") and other stakeholders to assess whether dam removal can occur consistent with the settlement's terms. For PacifiCorp, the key elements of the settlement include: (1) a contribution from PacifiCorp's Oregon and California customers capped at $200 million plus $250 million in California bond funds; (2) complete indemnification from harms associated with dam removal; (3) transfer of the Federal Energy Regulatory Commission ("FERC") license to a third-party dam removal entity, the Klamath River Renewal Corporation ("KRRC"), who would conduct dam removal; and (4) ability for PacifiCorp to operate the facilities for the benefit of customers until dam removal commences.

Guarantees

PacifiCorp has entered into guarantees as part of the normal course of business and the sale or transfer of certain assets. These guarantees are not expected to have a material impact on PacifiCorp's consolidated financial results.

(10) Revenue from Contracts with Customers

The following table summarizes PacifiCorp's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class (in millions):




	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Customer Revenue:
Retail:
Residential	$	417	$	429	$	922	$	912
Commercial	393		393		763		752
Industrial	277		282		550		553
Other retail	80		84		117		116
Total retail	1,167		1,188		2,352		2,333
Wholesale	55		30		110		66
Transmission	45		37		77		62
Other Customer Revenue	28		31		48		54
Total Customer Revenue	1,295		1,286		2,587		2,515
Other revenue	19		12		24		25
Total operating revenue	$	1,314	$	1,298	$	2,611	$	2,540

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

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

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

Net income for the second quarter of 2022 was $82 million, a decrease of $143 million, or 64%, compared to 2021. Net income decreased primarily due to higher operations and maintenance expense of $120 million, lower income tax benefit of $11 million, higher property and other taxes of $8 million and higher other expense of $6 million, partially offset by higher utility margin of $6 million. Operations and maintenance expense increased primarily due to an increase in the loss accruals associated with the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased electricity prices, higher retail rates, higher average wholesale market prices and lower thermal generation volumes, partially offset by higher natural gas-fueled generation prices, lower retail volumes, higher purchased electricity volumes and lower deferred net power costs in accordance with established adjustment mechanisms. Retail customer volumes decreased 3.3%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers. Energy generated decreased 7% for the second quarter of 2022 compared to 2021 primarily due to lower coal-fueled and natural gas-fueled generation, partially offset by higher wind-powered and hydroelectric generation. Wholesale electricity sales volumes were essentially flat and purchased electricity volumes increased 12%.

Net income for the first six months of 2022 was $212 million, a decrease of $182 million, or 46%, compared to 2021 primarily due to higher operations and maintenance expense of $138 million, lower income tax benefit of $24 million, higher depreciation and amortization expense of $20 million and higher other expense of $14 million, partially offset by higher utility margin of $20 million. Operations and maintenance expense increased mainly due to an increase in loss accruals related to the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased electricity prices, higher retail rates, higher average wholesale market prices, lower thermal generation volumes, and higher wheeling revenue, partially offset by higher natural gas-fueled generation prices, higher purchased electricity volumes and lower retail volumes. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers. Energy generated decreased 4% for the first six months of 2022 compared to 2021 primarily due to lower coal-fueled and natural gas-fueled generation, partially offset by higher wind-powered and hydroelectric generation. Wholesale electricity sales volumes decreased 1% and purchased electricity volumes increased 9%.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as utility margin, to help evaluate results of operations. Utility margin is calculated as operating revenue less cost of fuel and energy, which are captions presented on the Consolidated Statements of Operations.

PacifiCorp's cost of fuel and energy is generally recovered from its customers through regulatory recovery mechanisms and as a result, changes in PacifiCorp's revenue are comparable to changes in such expenses. As such, management believes utility margin more appropriately and concisely explains profitability rather than a discussion of revenue and cost of fuel and energy separately. Management believes the presentation of utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.

Utility margin is not a measure calculated in accordance with GAAP and should be viewed as a supplement to and not a substitute for operating income which is the most comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin:
Operating revenue	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
Cost of fuel and energy	451		441		10		2		916		865		51		6
Utility margin	863		857		6		1		1,695		1,675		20		1
Operations and maintenance	375		255		120		47		652		514		138		27
Depreciation and amortization	279		275		4		1		559		539		20		4
Property and other taxes	51		43		8		19		110		104		6		6
Operating income	$	158	$	284	$	(126)	(44)	%	$	374	$	518	$	(144)	(28)	%

Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
Cost of fuel and energy	451		441		10		2		916		865		51		6
Utility margin	$	863	$	857	$	6	1	%	$	1,695	$	1,675	$	20	1	%

Sales (GWhs):
Residential	3,854		4,032		(178)		(4)	%	8,618		8,664		(46)		(1)	%
Commercial	4,633		4,633		—		—		9,183		9,103		80		1
Industrial, irrigation and other	4,849		5,127		(278)		(5)		9,372		9,601		(229)		(2)
Total retail	13,336		13,792		(456)		(3)		27,173		27,368		(195)		(1)
Wholesale	1,245		1,244		1		—		2,798		2,835		(37)		(1)
Total sales	14,581		15,036		(455)		(3)	%	29,971		30,203		(232)		(1)	%


Average number of retail customers (in thousands)	2,033		1,998		35		2	%	2,029		1,994		35		2	%

Average revenue per MWh:
Retail	$	88.14	$	86.26	$	1.88	2	%	$	86.77	$	85.21	$	1.56	2	%
Wholesale	$	51.53	$	31.08	$	20.45	66	%	$	44.64	$	30.97	$	13.67	44	%

Heating degree days	1,736		1,228		508		41	%	6,481		5,915		566		10	%

Cooling degree days	406		746		(340)		(46)	%	411		746		(335)		(45)	%

Sources of energy (GWhs)(1):
Coal	6,260		7,502		(1,242)		(17)	%	13,171		15,146		(1,975)		(13)	%
Natural gas	2,747		3,223		(476)		(15)		5,862		6,288		(426)		(7)
Wind(2)	1,817		1,383		434		31		4,209		3,121		1,088		35
Hydroelectric and other(2)	1,033		703		330		47		2,017		1,691		326		19
Total energy generated	11,857		12,811		(954)		(7)		25,259		26,246		(987)		(4)
Energy purchased	3,717		3,321		396		12		6,940		6,349		591		9
Total	15,574		16,132		(558)		(3)	%	32,199		32,595		(396)		(1)	%

Average cost of energy per MWh:
Energy generated(3)	$	21.90	$	17.84	$	4.06	23	%	$	20.27	$	17.75	$	2.52	14	%
Energy purchased	$	48.92	$	65.62	$	(16.70)	(25)	%	$	51.97	$	56.80	$	(4.83)	(9)	%

(1) GWh amounts are net of energy used by the related generating facilities.

(2) All or some of the renewable energy attributes associated with generation from these sources may be: (a) used in future years to comply with RPS or other regulatory requirements or (b) sold to third parties in the form of Renewable Energy Credits or other environmental commodities.

(3) The average cost per MWh of energy generated includes only the cost of fuel associated with the generating facilities.

Quarter Ended June 30, 2022 compared to Quarter Ended June 30, 2021

Utility margin increased $6 million, or 1%, for the second quarter of 2022 compared to 2021 primarily due to:

•$36 million of lower purchased electricity costs from lower average market prices, partially offset by higher purchased volumes;

•$25 million increase in wholesale revenue primarily due to higher average market prices;

•$22 million of lower coal-fueled generation costs primarily due to lower volumes; and

•$7 million of favorable wheeling activities.

The increases above were partially offset by:

•$54 million of higher natural gas-fueled generation costs due to higher average prices, partially offset by lower volumes;

•$14 million decrease in retail revenue due to lower volumes, partially offset by higher average prices. Retail customer volumes decreased 3.3%, primarily due to the unfavorable impacts of weather, mainly in Utah, Idaho and Oregon and a decrease in customer usage, mainly in Utah and Oregon, partially offset by an increase in the average number of customers across the service territory, mainly in Utah and Oregon; and

•$13 million of lower deferred net power costs in accordance with established adjustment mechanisms.

Operations and maintenance increased $120 million, or 47%, for the second quarter of 2022 compared to 2021 primarily due to a $64 million increase in the loss accruals associated with the September 2020 wildfires net of estimated insurance recoveries, $27 million of higher general and plant maintenance costs, higher insurance premiums due to cost increases related to wildfire coverage and higher labor and employee expenses.

Depreciation and amortization increased $4 million, or 1%, for the second quarter of 2022 compared to 2021 primarily due to prior year deferrals in Idaho associated with the increase in depreciation expense resulting from the implementation of the 2018 depreciation study compounded by amortization of those deferrals in the current quarter and higher plant in-service balances in the current quarter, partially offset by lower depreciation associated with Oregon's accelerated depreciation of coal units due to an update to the Oregon allocation factor applied in computing the incremental depreciation.

Property and other taxes increased $8 million, or 19%, for the second quarter of 2022 compared to 2021 primarily due to higher assessed property values in Utah and Wyoming.

Other, net decreased $9 million for the second quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies associated with PacifiCorp's supplemental executive retirement plan.

Income tax benefit decreased $11 million, or 58% for the second quarter of 2022 compared to 2021. The effective tax rate was (11)% for the second quarter of 2022 and (9)% for the second quarter of 2021. The effective tax rate decreased primarily due to the relative impact on a percentage basis of PTCs on the lower pre-tax book income in the second quarter of 2022 compared to that of 2021, which results in a higher benefit related to PTCs in the second quarter of 2022.

First Six Months of 2022 compared to First Six Months Ended 2021

Utility margin increased $20 million, or 1%, for the first six months of 2022 compared to 2021 primarily due to:

•$37 million increase in wholesale revenue due to higher average market prices, partially offset by lower volumes;

•$34 million of lower coal-fueled generation costs due to lower volumes, partially offset by higher average prices;

•$26 million increase in retail revenue due to higher average prices, partially offset by lower volumes. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impacts of weather, mainly in Utah, Oregon and Idaho and a decrease in customer usage primarily in Utah, partially offset by an increase in the average number of customers across the service territory, mainly in Utah and Oregon;

•$24 million of lower purchased electricity costs due to lower average market prices; and

•$15 million of favorable wheeling activities.

The increases above were partially offset by:

•$80 million of higher natural gas-fueled generation costs due to higher average prices, partially offset by lower volumes;

•$24 million of higher purchased electricity costs due to higher volumes;

•$5 million of lower deferred net power costs in accordance with established adjustment mechanisms; and

•$5 million of lower wind-based ancillary revenue.

Operations and maintenance increased $138 million, or 27%, for the first six months of 2022 compared to 2021 primarily due to a $64 million increase in the loss accruals associated with the September 2020 wildfires net of estimated insurance recoveries, $37 million of higher general and plant maintenance costs, higher insurance premiums due to cost increases related to wildfire coverage and higher bad debt expense.

Depreciation and amortization increased $20 million, or 4% for the first six months of 2022 compared to 2021 primarily due to prior year deferrals in Idaho associated with the increase in depreciation expense resulting from the implementation of the 2018 depreciation study compounded by amortization of those deferrals in the current year and higher plant in-service balances in the current year, partially offset by lower depreciation associated with Oregon's accelerated depreciation of coal units due to an update to the Oregon allocation factor applied in computing the incremental depreciation.

Property and other taxes increased $6 million, or 6% for the first six months of 2022 compared to 2021 primarily due to higher assessed property values in Utah and Wyoming.

Other, net decreased $19 million for the first six months of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies associated with PacifiCorp's supplemental executive retirement plan.

Income tax benefit decreased $24 million, or 80% for the first six months of 2022 compared to the first six months of 2021. The effective tax rate was (3)% for the first six months of 2022 and (8)% for the first six months of 2021. The effective tax rate increased primarily due to a valuation allowance PacifiCorp recorded in the first quarter of 2022 against state net operating loss carryforwards.

Liquidity and Capital Resources

As of June 30, 2022, PacifiCorp's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	390

Credit facilities	1,200
Less:

Tax-exempt bond support	(218)
Net credit facilities	982

Total net liquidity	$	1,372

Credit facilities:
Maturity dates	2025

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021 were $1,213 million and $1,046 million, respectively. The change was primarily due to timing of operating payables, higher transmission deposits, cash received for income taxes and collateral received from counterparties, partially offset by higher fuel and wholesale purchases.

The timing of PacifiCorp's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods and assumptions for each payment date.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021 were $(888) million and $(819) million, respectively. The change is primarily due to an increase in capital expenditures of $75 million. Refer to "Future Uses of Cash" for discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2022 were $(111) million. Uses of cash consisted primarily of $100 million for common stock dividends paid to PPW Holdings LLC and $9 million for the repayment of long-term debt.

Net cash flows from financing activities for the six-month period ended June 30, 2021 were $(196) million. Sources of cash consisted of $208 million from the borrowing of short-term debt. Uses of cash consisted substantially of $400 million for the repayment of long-term debt.

Short-term Debt

Regulatory authorities limit PacifiCorp to $1.5 billion of short-term debt. As of June 30, 2022 and December 31, 2021, PacifiCorp had no short-term debt outstanding.

Debt Authorizations

PacifiCorp currently has regulatory authority from the OPUC and the Idaho Public Utilities Commission to issue an additional $2 billion of long-term debt. PacifiCorp currently has an effective shelf registration statement with the SEC to issue an indeterminate amount of first mortgage bonds through September 2023. PacifiCorp must make a notice filing with the WUTC prior to any future issuance.

Common Shareholders' Equity

In May 2022, PacifiCorp declared a common stock dividend of $100 million, paid in June 2022, to PPW Holdings LLC.

Future Uses of Cash

PacifiCorp has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the issuance of commercial paper, the use of unsecured revolving credit facilities, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which PacifiCorp has access to external financing depends on a variety of factors, including PacifiCorp's credit ratings, investors' judgment of risk associated with PacifiCorp and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

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

Historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022

Wind generation	$	82	$	14	$	66
Electric distribution	326		303		682
Electric transmission	136		405		1,185
Other	275		172		346
Total	$	819	$	894	$	2,279

PacifiCorp's 2021 IRP identified a roadmap for a significant increase in renewable and carbon free generation resources, coal to natural gas conversion of certain coal-fueled units, energy storage and associated transmission. PacifiCorp's 2021 IRP identified over 1,800 MWs of new wind-powered generating resources that are expected to be online by 2025. PacifiCorp anticipates that the additional new wind-powered generation will be a mixture of owned and contracted resources. PacifiCorp has included an estimate for these new generation resources and associated transmission in its forecast capital expenditures for 2022 through 2024. These estimates are likely to change as a result of the RFP process. PacifiCorp's historical and forecast capital expenditures include the following:

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

•Electric distribution includes both growth projects and operating expenditures. Operating expenditures includes spend on wildfire mitigation and wildfire and storm damage restoration. Expenditures for these items totaled $59 million and $117 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for wildfire mitigation and wildfire and storm damage restoration totals $97 million for the remainder of 2022. Remaining investments relate to expenditures for new connections and distribution operations.

•Electric transmission includes both growth projects and operating expenditures. Transmission investment primarily reflects planned costs for the 416-mile, 500-kV high-voltage transmission line between the Aeolus substation near Medicine Bow, Wyoming and the Clover substation near Mona, Utah; the 59-mile, 230-kV high-voltage transmission line between the Windstar substation near Glenrock, Wyoming and the Aeolus substation; and the 290-mile, 500-kV high-voltage transmission line from the Longhorn substation near Boardman, Oregon to the Hemingway substation near Boise, Idaho. Expenditures for these segments totaled $296 million and $35 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals $614 million for the remainder of 2022.

•Other includes both growth projects and operating expenditures. Expenditures for information technology totaled $77 million and $47 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned information technology spending totals $87 million for the remainder of 2022. Remaining investments relate to operating projects that consist of routine expenditures for generation and other infrastructure needed to serve existing and expected demand.

Energy Supply Planning

As required by certain state regulations, PacifiCorp uses an IRP to develop a long-term resource plan to ensure that PacifiCorp can continue to provide reliable and cost-effective electric service to its customers while maintaining compliance with existing and evolving environmental laws and regulations. PacifiCorp files its IRP biennially with the state commissions in each of the six states where PacifiCorp operates. Five states indicate whether the IRP meets the state commission's IRP standards and guidelines, a process referred to as "acknowledgment" in some states. Acknowledgement by a state commission does not address cost recovery or prudency of resources ultimately selected.

In September 2021, PacifiCorp filed its 2021 IRP with its state commissions and subsequently filed its 2021 IRP Update in March and April 2022. In March 2022, the OPUC acknowledged PacifiCorp's 2021 IRP and its preferred portfolio. In June 2022, the UPSC issued an order declining to acknowledge the 2021 IRP due to its determination that PacifiCorp did not meet the commission's IRP guidelines by excluding new natural gas-fueled resources in its modeling of the 2021 IRP's preferred portfolio, as well as the commission's view that PacifiCorp did not provide ample time for public input and information exchange during the development of the IRP. The UPSC did approve the 2022 All Source RFP ("2022AS RFP") to procure resources identified in the 2021 IRP. Reviews of the 2021 IRP by the Wyoming Public Service Commission, the WUTC and the Idaho Public Utilities Commission are ongoing.

Requests for Proposals

PacifiCorp issues individual RFPs to procure resources identified in the IRP or resources driven by customer demands. The IRP and the RFPs provide for the identification and staged procurement of resources to meet load or state-specific compliance obligations. Depending upon the specific RFP, applicable laws and regulations may require PacifiCorp to file draft RFPs with the UPSC, the OPUC and the WUTC. Approval by the UPSC, the OPUC or the WUTC may be required depending on the nature of the RFPs.

A draft of PacifiCorp's 2022AS RFP was filed for approval with the WUTC in December 2021, and with the UPSC and the OPUC in January 2022. The draft 2022AS RFP was approved by the WUTC in March 2022 and by the UPSC and the OPUC in April 2022. The 2022AS RFP was issued to market in April 2022. PacifiCorp-owned bids are due late November 2022 and market bids are due February 2023.

Material Cash Requirements

As of June 30, 2022, there have been no material changes in cash requirements from the information provided in Item 7 of PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2021, other than those disclosed in Note 9 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Regulatory Matters

PacifiCorp is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding PacifiCorp's current regulatory matters.

Environmental Laws and Regulations

PacifiCorp is subject to federal, state and local laws and regulations regarding climate change, wildfire prevention and mitigation, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact PacifiCorp's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. PacifiCorp believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and PacifiCorp is unable to predict the impact of the changing laws and regulations on its operations and financial results.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, pension and other postretirement benefits, income taxes and revenue recognition-unbilled revenue. For additional discussion of PacifiCorp's critical accounting estimates, see Item 7 of PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in PacifiCorp's assumptions regarding critical accounting estimates since December 31, 2021.

MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company

Consolidated Financial Section

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

MidAmerican Energy Company

Results of Review of Interim Financial Information

We have reviewed the accompanying balance sheet of MidAmerican Energy Company ("MidAmerican Energy") as of June 30, 2022, the related statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheet of MidAmerican Energy as of December 31, 2021, and the related statements of operations, changes in shareholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Basis for Review Results

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

/s/ Deloitte & Touche LLP

Des Moines, Iowa

August 5, 2022

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	495	$	232
Trade receivables, net	525		526
Income tax receivable	19		79
Inventories	226		234
Other current assets	186		123
Total current assets	1,451		1,194

Property, plant and equipment, net	20,504		20,301
Regulatory assets	509		473
Investments and restricted investments	893		1,026
Other assets	278		263

Total assets	$	23,635	$	23,257

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

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	415	$	531
Accrued interest	84		84
Accrued property, income and other taxes	206		158

Current portion of long-term debt	64		—
Other current liabilities	181		145
Total current liabilities	950		918

Long-term debt	7,661		7,721
Regulatory liabilities	1,026		1,080
Deferred income taxes	3,413		3,389
Asset retirement obligations	698		714
Other long-term liabilities	476		475
Total liabilities	14,224		14,297

Commitments and contingencies (Note 8)

Shareholder's equity:
Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding	—		—
Additional paid-in capital	561		561
Retained earnings	8,850		8,399

Total shareholder's equity	9,411		8,960

Total liabilities and shareholder's equity	$	23,635	$	23,257

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas and other	172		107		569		629
Total operating revenue	897		693		1,902		1,760

Operating expenses:
Cost of fuel and energy	174		103		299		254
Cost of natural gas purchased for resale and other	120		57		418		489
Operations and maintenance	200		184		392		377
Depreciation and amortization	277		209		527		416
Property and other taxes	36		37		76		73
Total operating expenses	807		590		1,712		1,609

Operating income	90		103		190		151

Other income (expense):
Interest expense	(78)		(74)		(156)		(148)
Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	14		8		29		14
Other, net	(12)		15		(15)		26
Total other income (expense)	(71)		(49)		(133)		(104)

Income before income tax benefit	19		54		57		47
Income tax benefit	(188)		(159)		(394)		(313)

Net income	$	207	$	213	$	451	$	360

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions)


	Common Stock		Additional Paid-in Capital		Retained Earnings		Total Shareholder's Equity

Balance, March 31, 2021	$	—	$	561	$	7,651	$	8,212
Net income	—		—		213		213
Other equity transactions	—		—		1		1
Balance, June 30, 2021	$	—	$	561	$	7,865	$	8,426

Balance, December 31, 2020	$	—	$	561	$	7,504	$	8,065
Net income	—		—		360		360
Other equity transactions	—		—		1		1
Balance, June 30, 2021	$	—	$	561	$	7,865	$	8,426

Balance, March 31, 2022	$	—	$	561	$	8,643	$	9,204
Net income	—		—		207		207

Balance, June 30, 2022	$	—	$	561	$	8,850	$	9,411

Balance, December 31, 2021	$	—	$	561	$	8,399	$	8,960
Net income	—		—		451		451

Balance, June 30, 2022	$	—	$	561	$	8,850	$	9,411

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	451	$	360
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	527		416
Amortization of utility plant to other operating expenses	19		17
Allowance for equity funds	(29)		(14)
Deferred income taxes and investment tax credits, net	58		196
Settlements of asset retirement obligations	(28)		(19)
Other, net	33		11
Changes in other operating assets and liabilities:
Trade receivables and other assets	2		(275)
Inventories	8		41


Accrued property, income and other taxes, net	94		56
Accounts payable and other liabilities	(10)		(68)
Net cash flows from operating activities	1,125		721

Cash flows from investing activities:
Capital expenditures	(862)		(720)
Purchases of marketable securities	(214)		(109)
Proceeds from sales of marketable securities	210		105
Other, net	6		(2)
Net cash flows from investing activities	(860)		(726)

Cash flows from financing activities:




Other, net	(1)		(2)
Net cash flows from financing activities	(1)		(2)

Net change in cash and cash equivalents and restricted cash and cash equivalents	264		(7)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	239		45
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	503	$	38

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

MIDAMERICAN ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Financial Statements as of June 30, 2022, and for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Financial Statements. Note 2 of Notes to Financial Statements included in MidAmerican Energy's Annual Report on Form 10-K for the year ended December 31, 2021, describes the most significant accounting policies used in the preparation of the unaudited Financial Statements. There have been no significant changes in MidAmerican Energy's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022.

(2) Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for wildlife preservation. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021

Cash and cash equivalents	$	495	$	232
Restricted cash and cash equivalents in other current assets	8		7
Total cash and cash equivalents and restricted cash and cash equivalents	$	503	$	239

(3) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
		June 30,		December 31,
	Depreciable Life	2022		2021
Utility plant in-service, net:
Generation	20-70 years	$	17,737	$	17,397
Transmission	52-75 years	2,583		2,474
Electric distribution	20-75 years	4,725		4,661
Natural gas distribution	29-75 years	2,049		2,039
Utility plant in-service		27,094		26,571
Accumulated depreciation and amortization		(7,658)		(7,376)
Utility plant in-service, net		19,436		19,195
Nonregulated property, net:
Nonregulated property, gross	20-50 years	7		7
Accumulated depreciation and amortization		(1)		(1)
Nonregulated property, net		6		6
		19,442		19,201
Construction work-in-progress		1,062		1,100
Property, plant and equipment, net		$	20,504	$	20,301

(4) Recent Financing Transactions

Credit Facilities

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(973)		(271)		(682)		(634)
State income tax, net of federal income tax impacts	(26)		(31)		(23)		(32)
Effects of ratemaking	(11)		(15)		(9)		(21)
Other, net	—		2		2		—
Effective income tax rate	(989)	%	(294)	%	(691)	%	(666)	%

Income tax credits relate primarily to production tax credits ("PTCs") from MidAmerican Energy's wind-powered generating facilities. Federal renewable electricity PTCs are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. MidAmerican Energy recognizes its renewable electricity PTCs throughout the year based on when the credits are earned and excludes them from the annual effective tax rate that is the basis for the interim recognition of other income tax expense. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the six-month periods ended June 30, 2022 and 2021 totaled $388 million and $297 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its U.S. federal and Iowa state income tax returns. Consistent with established regulatory practice, MidAmerican Energy's provision for income tax has been computed on a stand-alone basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. MidAmerican Energy received net cash payments for income tax from BHE totaling $541 million and $558 million for the six-month periods ended June 30, 2022 and 2021, respectively.

(6) Employee Benefit Plans

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

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Pension:
Service cost	$	4	$	5	$	9	$	10
Interest cost	5		5		10		11
Expected return on plan assets	(7)		(10)		(14)		(19)
Settlement	—		—		2		—
Net amortization	1		1		1		1
Net periodic benefit cost	$	3	$	1	$	8	$	3

Other postretirement:
Service cost	$	2	$	2	$	4	$	4
Interest cost	2		2		4		4
Expected return on plan assets	(3)		(3)		(7)		(5)
Net amortization	(1)		(1)		(1)		(2)
Net periodic benefit cost	$	—	$	—	$	—	$	1

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Statements of Operations. Employer contributions to the pension and other postretirement benefit plans are expected to be $7 million and $3 million, respectively, during 2022. As of June 30, 2022, $4 million and $2 million of contributions had been made to the pension and other postretirement benefit plans, respectively.

(7) Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of June 30, 2022:
Assets:
Commodity derivatives	$	1	$	66	$	28	$	(22)	$	73
Money market mutual funds	498		—		—		—		498
Debt securities:
U.S. government obligations	220		—		—		—		220
International government obligations	—		1		—		—		1
Corporate obligations	—		75		—		—		75
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:
U.S. companies	348		—		—		—		348
International companies	8		—		—		—		8
Investment funds	21		—		—		—		21
	$	1,096	$	146	$	28	$	(22)	$	1,248

Liabilities - commodity derivatives	$	(1)	$	(10)	$	(2)	$	7	$	(6)


	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:
U.S. 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:
U.S. companies	428		—		—		—		428
International companies	10		—		—		—		10
Investment funds	18		—		—		—		18
	$	916	$	129	$	3	$	(7)	$	1,041

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

(1)Represents netting under master netting arrangements and a net cash collateral payable of $15 million as of June 30, 2022 and a net cash collateral receivable of $5 million as of December 31, 2021.

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

The following table reconciles the beginning and ending balances of MidAmerican Energy's commodity derivative assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Beginning balance	$	4	$	1	$	(5)	$	2
Changes in fair value recognized in regulatory assets	31		—		44		—
Settlements	(9)		(2)		(13)		(3)
Ending balance	$	26	$	(1)	$	26	$	(1)

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


	As of June 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,725	$	7,376	$	7,721	$	9,037

(8) Commitments and Contingencies

Legal Matters

MidAmerican Energy is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Energy does not believe that such normal and routine litigation will have a material impact on its financial results.

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact its current and future operations. MidAmerican Energy believes it is in material compliance with all applicable laws and regulations.

Transmission Rates

MidAmerican Energy's wholesale transmission rates are set annually using Federal Energy Regulatory Commission ("FERC")-approved formula rates subject to true-up for actual cost of service. MidAmerican Energy is authorized by the FERC to include a 0.50% adder beyond the approved base return on equity ("ROE") effective January 2015. Prior to September 2016, the rates in effect were based on a 12.38% ROE. In November 2013 and February 2015, a coalition of intervenors filed successive complaints with the FERC requesting that the 12.38% ROE no longer be found just and reasonable and sought to reduce the base ROE to 9.15% and 8.67%, respectively. In September 2016, the FERC issued an order for the first complaint, which reduces the base ROE to 10.32% and required refunds, plus interest, for the period from November 2013 through February 2015. Customer refunds relative to the first complaint occurred in February 2017. In November 2019, the FERC issued an order addressing the second complaint and issues on appeal in the first complaint. The order established a ROE of 9.88% (10.38% including the 0.50% adder) for the 15-month refund period of the first complaint and prospectively from September 2016 forward. In May 2020, the FERC issued an order on rehearing of the November 2019 order. The May 2020 order affirmed the FERC's prior decision to dismiss the second complaint and established an ROE of 10.02% (10.52% including the 0.50% adder) for the 15-month refund period of the first complaint and prospectively from September 2016 to the date of the May 2020 order. These orders continue to be subject to judicial appeal. MidAmerican Energy cannot predict the ultimate outcome of these matters and, as of June 30, 2022, has accrued an $8 million liability for refunds of amounts collected under the higher ROE during the periods covered by both complaints.

(9) Revenue from Contracts with Customers

The following table summarizes MidAmerican Energy's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class, including a reconciliation to MidAmerican Energy's reportable segment information included in Note 10 (in millions):


	For the Three-Month Period Ended June 30, 2022								For the Six-Month Period Ended June 30, 2022
	Electric		Natural Gas		Other		Total		Electric		Natural Gas		Other		Total
Customer Revenue:
Retail:
Residential	$	185	$	87	$	—	$	272	$	353	$	312	$	—	$	665
Commercial	91		31		—		122		165		119		—		284
Industrial	277		9		—		286		475		18		—		493
Natural gas transportation services	—		9		—		9		—		23		—		23
Other retail(1)	41		—		—		41		73		1		—		74
Total retail	594		136		—		730		1,066		473		—		1,539
Wholesale	84		34		—		118		188		92		—		280
Multi-value transmission projects	13		—		—		13		28		—		—		28
Other Customer Revenue	—		—		1		1		—		—		2		2
Total Customer Revenue	691		170		1		862		1,282		565		2		1,849
Other revenue	34		1		—		35		51		2		—		53
Total operating revenue	$	725	$	171	$	1	$	897	$	1,333	$	567	$	2	$	1,902


	For the Three-Month Period Ended June 30, 2021								For the Six-Month Period Ended June 30, 2021
	Electric		Natural Gas		Other		Total		Electric		Natural Gas		Other		Total
Customer Revenue:
Retail:
Residential	$	170	$	59	$	—	$	229	$	331	$	367	$	—	$	698
Commercial	80		18		—		98		151		147		—		298
Industrial	230		3		—		233		420		15		—		435
Natural gas transportation services	—		9		—		9		—		19		—		19
Other retail(1)	36		—		—		36		66		1		—		67
Total retail	516		89		—		605		968		549		—		1,517
Wholesale	52		17		—		69		126		68		—		194
Multi-value transmission projects	15		—		—		15		30		—		—		30
Other Customer Revenue	—		—		1		1		—		—		11		11
Total Customer Revenue	583		106		1		690		1,124		617		11		1,752
Other revenue	3		—		—		3		7		1		—		8
Total operating revenue	$	586	$	106	$	1	$	693	$	1,131	$	618	$	11	$	1,760

(1) Other retail includes provisions for rate refunds, for which any actual refunds will be reflected in the applicable customer classes upon resolution of the related regulatory proceeding.

(10) Segment Information

MidAmerican Energy has identified two reportable segments: regulated electric and regulated natural gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated natural gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting natural gas owned by others through its distribution system. Pricing for regulated electric and regulated natural gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost.

The following tables provide information on a reportable segment basis (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas	171		106		567		618
Other	1		1		2		11
Total operating revenue	$	897	$	693	$	1,902	$	1,760

Operating income:
Regulated electric	$	87	$	103	$	138	$	112
Regulated natural gas	3		—		52		39

Total operating income	90		103		190		151
Interest expense	(78)		(74)		(156)		(148)
Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	14		8		29		14
Other, net	(12)		15		(15)		26
Income before income tax benefit	$	19	$	54	$	57	$	47


	As of
	June 30, 2022		December 31, 2021
Assets:
Regulated electric	$	21,967	$	21,385
Regulated natural gas	1,667		1,871
Other	1		1
Total assets	$	23,635	$	23,257

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member of

MidAmerican Funding, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries ("MidAmerican Funding") as of June 30, 2022, the related consolidated statements of operations and changes in member's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) and in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of MidAmerican Funding as of December 31, 2021, and the related consolidated statements of operations, changes in member's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

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

/s/ Deloitte & Touche LLP

Des Moines, Iowa

August 5, 2022

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	497	$	233
Trade receivables, net	525		526
Income tax receivable	20		80
Inventories	226		234
Other current assets	187		123
Total current assets	1,455		1,196

Property, plant and equipment, net	20,505		20,302
Goodwill	1,270		1,270
Regulatory assets	509		473
Investments and restricted investments	895		1,028
Other assets	277		262

Total assets	$	24,911	$	24,531

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


	As of
	June 30,		December 31,
	2022		2021
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable	$	415	$	531
Accrued interest	89		89
Accrued property, income and other taxes	206		158
Note payable to affiliate	197		189

Current portion of long-term debt	64		—
Other current liabilities	181		146
Total current liabilities	1,152		1,113

Long-term debt	7,901		7,961
Regulatory liabilities	1,026		1,080
Deferred income taxes	3,411		3,387
Asset retirement obligations	698		714
Other long-term liabilities	477		475
Total liabilities	14,665		14,730

Commitments and contingencies (Note 8)

Member's equity:
Paid-in capital	1,679		1,679
Retained earnings	8,567		8,122

Total member's equity	10,246		9,801

Total liabilities and member's equity	$	24,911	$	24,531

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas and other	172		107		569		629
Total operating revenue	897		693		1,902		1,760

Operating expenses:
Cost of fuel and energy	174		103		299		254
Cost of natural gas purchased for resale and other	120		57		418		489
Operations and maintenance	200		184		392		377
Depreciation and amortization	277		209		527		416
Property and other taxes	36		37		76		73
Total operating expenses	807		590		1,712		1,609

Operating income	90		103		190		151

Other income (expense):
Interest expense	(83)		(78)		(165)		(156)
Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	14		8		29		14
Other, net	(10)		16		(14)		26
Total other income (expense)	(74)		(52)		(141)		(112)

Income before income tax benefit	16		51		49		39
Income tax benefit	(188)		(160)		(396)		(316)

Net income	$	204	$	211	$	445	$	355

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY (Unaudited)

(Amounts in millions)


	Paid-in Capital		Retained Earnings		Total Member's Equity

Balance, March 31, 2021	$	1,679	$	7,384	$	9,063
Net income	—		211		211
Other equity transactions	—		(1)		(1)
Balance, June 30, 2021	$	1,679	$	7,594	$	9,273

Balance, December 31, 2020	$	1,679	$	7,240	$	8,919
Net income	—		355		355
Other equity transactions	—		(1)		(1)
Balance, June 30, 2021	$	1,679	$	7,594	$	9,273

Balance, March 31, 2022	$	1,679	$	8,363	$	10,042
Net income	—		204		204

Balance, June 30, 2022	$	1,679	$	8,567	$	10,246

Balance, December 31, 2021	$	1,679	$	8,122	$	9,801
Net income	—		445		445

Balance, June 30, 2022	$	1,679	$	8,567	$	10,246

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	445	$	355
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	527		416
Amortization of utility plant to other operating expenses	19		17
Allowance for equity funds	(29)		(14)
Deferred income taxes and investment tax credits, net	58		195

Settlements of asset retirement obligations	(28)		(19)
Other, net	32		11
Changes in other operating assets and liabilities:
Trade receivables and other assets	1		(275)
Inventories	8		41


Accrued property, income and other taxes, net	95		56
Accounts payable and other liabilities	(10)		(68)
Net cash flows from operating activities	1,118		715

Cash flows from investing activities:
Capital expenditures	(862)		(721)
Purchases of marketable securities	(214)		(109)
Proceeds from sales of marketable securities	210		105

Other, net	6		(1)
Net cash flows from investing activities	(860)		(726)

Cash flows from financing activities:



Net change in note payable to affiliate	8		6

Other, net	(1)		(2)
Net cash flows from financing activities	7		4

Net change in cash and cash equivalents and restricted cash and cash equivalents	265		(7)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	240		46
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	505	$	39

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2022, and for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in MidAmerican Funding's Annual Report on Form 10-K for the year ended December 31, 2021, describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in MidAmerican Funding's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022.

(2) Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for wildlife preservation. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021

Cash and cash equivalents	$	497	$	233
Restricted cash and cash equivalents in other current assets	8		7
Total cash and cash equivalents and restricted cash and cash equivalents	$	505	$	240

(3) Property, Plant and Equipment, Net

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

(4) Recent Financing Transactions

Refer to Note 4 of MidAmerican Energy's Notes to Financial Statements.

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(1,150)		(286)		(793)		(764)
State income tax, net of federal income tax impacts	(38)		(33)		(29)		(41)
Effects of ratemaking	(12)		(16)		(10)		(26)
Other, net	4		—		3		—
Effective income tax rate	(1,175)	%	(314)	%	(808)	%	(810)	%

Income tax credits relate primarily to production tax credits ("PTCs") from MidAmerican Energy's wind-powered generating facilities. Federal renewable electricity PTCs are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. MidAmerican Funding recognizes its renewable electricity PTCs throughout the year based on when the credits are earned and excludes them from the annual effective tax rate that is the basis for the interim recognition of other income tax expense. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the six-month periods ended June 30, 2022 and 2021 totaled $388 million and $297 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its U.S. federal and Iowa state income tax returns. Consistent with established regulatory practice, MidAmerican Funding's and MidAmerican Energy's provisions for income tax have been computed on a stand-alone basis, and substantially all of their currently payable or receivable income tax is remitted to or received from BHE. MidAmerican Funding received net cash payments for income tax from BHE totaling $544 million and $560 million for the six-month periods ended June 30, 2022 and 2021. respectively.

(6) Employee Benefit Plans

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

(7) Fair Value Measurements

Refer to Note 7 of MidAmerican Energy's Notes to Financial Statements. MidAmerican Funding's long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of MidAmerican Funding's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of MidAmerican Funding's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of MidAmerican Funding's long-term debt (in millions):


	As of June 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,965	$	7,646	$	7,961	$	9,350

(8) Commitments and Contingencies

MidAmerican Funding is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Funding does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Refer to Note 8 of MidAmerican Energy's Notes to Financial Statements.

(9) Revenue from Contracts with Customers

Refer to Note 9 of MidAmerican Energy's Notes to Financial Statements.

(10) Segment Information

MidAmerican Funding has identified two reportable segments: regulated electric and regulated natural gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated natural gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting natural gas owned by others through its distribution system. Pricing for regulated electric and regulated natural gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost. "Other" in the tables below consists of the financial results and assets of nonregulated operations, MHC and MidAmerican Funding.

The following tables provide information on a reportable segment basis (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas	171		106		567		618
Other	1		1		2		11
Total operating revenue	$	897	$	693	$	1,902	$	1,760

Operating income:
Regulated electric	$	87	$	103	$	138	$	112
Regulated natural gas	3		—		52		39

Total operating income	90		103		190		151
Interest expense	(83)		(78)		(165)		(156)
Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	14		8		29		14
Other, net	(10)		16		(14)		26
Income before income tax benefit	$	16	$	51	$	49	$	39


	As of
	June 30, 2022		December 31, 2021
Assets(1):
Regulated electric	$	23,158	$	22,576
Regulated natural gas	1,746		1,950
Other	7		5
Total assets	$	24,911	$	24,531


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

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

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

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the second quarter of 2022 was $207 million, a decrease of $6 million, or 3%, compared to 2021, primarily due to higher depreciation and amortization expense of $68 million, unfavorable other, net of $27 million, higher operations and maintenance expense of $16 million and higher interest expense of $4 million, offset by higher electric utility margin of $68 million, higher income tax benefit of $29 million, higher allowances for equity and borrowed funds of $9 million and higher natural gas utility margin of $2 million. Electric retail customer volumes increased 3% primarily due to higher customer usage and the favorable impact of weather. Wholesale electricity sales volumes increased 7% due to favorable market conditions. Natural gas retail customer volumes increased 21% due to the favorable impact of weather.

MidAmerican Energy's net income for the first six months of 2022 was $451 million, an increase of $91 million, or 25%, compared to 2021, primarily due to higher electric utility margin of $157 million, higher income tax benefit of $81 million, higher natural gas utility margin of $20 million and higher allowances for equity and borrowed funds of $20 million, offset by higher depreciation and amortization expense of $111 million, unfavorable other, net of $41 million, higher operations and maintenance expense of $15 million, higher interest expense of $8 million, lower nonregulated utility margins of $8 million and higher property and other taxes of $3 million. Electric retail customer volumes increased 4% primarily due to higher customer usage and the favorable impact of weather. Wholesale electricity sales volumes increased 20% due to favorable market conditions. Natural gas retail customer volumes increased 11% due to the favorable impact of weather.

MidAmerican Funding -

MidAmerican Funding's net income for the second quarter of 2022 was $204 million, a decrease of $7 million, or 3%, compared to 2021. MidAmerican Funding's net income for the first six months of 2022 was $445 million, an increase of $90 million, or 25%, compared to 2021. The variances in net income were primarily due to the changes in MidAmerican Energy's earnings discussed above.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, electric utility margin and natural gas utility margin, to help evaluate results of operations. Electric utility margin is calculated as regulated electric operating revenue less cost of fuel and energy, which are captions presented on the Statements of Operations. Natural gas utility margin is calculated as regulated natural gas operating revenue less regulated cost of natural gas purchased for resale, which are included in regulated natural gas and other and cost of natural gas purchased for resale and other, respectively, on the Statements of Operations.

MidAmerican Energy's cost of fuel and energy and cost of natural gas purchased for resale are generally recovered from its retail customers through regulatory recovery mechanisms, and as a result, changes in MidAmerican Energy's expense included in regulatory recovery mechanisms result in comparable changes to revenue. As such, management believes electric utility margin and natural gas utility margin more appropriately and concisely explain profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of electric utility margin and natural gas utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.

100

Electric utility margin and natural gas utility margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income, which is the most comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to MidAmerican Energy's operating income (in millions):


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Electric utility margin:
Operating revenue	$	725	$	586	$	139	24	%	$	1,333	$	1,131	$	202	18	%
Cost of fuel and energy	174		103		71		69		299		254		45		18
Electric utility margin	551		483		68		14	%	1,034		877		157		18	%

Natural gas utility margin:
Operating revenue	171		106		65		61	%	567		618		(51)		(8)	%
Natural gas purchased for resale	120		57		63		*		418		489		(71)		(15)
Natural gas utility margin	51		49		2		4	%	149		129		20		16	%

Utility margin	602		532		70		13	%	1,183		1,006		177		18	%

Other operating revenue	1		1		—		—	%	2		11		(9)		(82)	%

Operations and maintenance	200		184		16		9		392		377		15		4
Depreciation and amortization	277		209		68		33		527		416		111		27
Property and other taxes	36		37		(1)		(3)		76		73		3		4

Operating income	$	90	$	103	$	(13)	(13)	%	$	190	$	151	$	39	26	%

* Not meaningful.

101

Electric Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	725	$	586	$	139	24	%	$	1,333	$	1,131	$	202	18	%
Cost of fuel and energy	174		103		71		69		299		254		45		18
Utility margin	$	551	$	483	$	68	14	%	$	1,034	$	877	$	157	18	%

Sales (GWhs):
Residential	1,552		1,486		66		4	%	3,405		3,224		181		6	%
Commercial	953		894		59		7		1,966		1,832		134		7
Industrial	4,149		4,056		93		2		8,128		7,875		253		3
Other	406		401		5		1		809		771		38		5
Total retail	7,060		6,837		223		3		14,308		13,702		606		4
Wholesale	4,146		3,872		274		7		9,471		7,923		1,548		20
Total sales	11,206		10,709		497		5	%	23,779		21,625		2,154		10	%

Average number of retail customers (in thousands)	812		803		9		1	%	811		802		9		1	%

Average revenue per MWh:
Retail	$	84.18	$	75.62	$	8.56	11	%	$	74.52	$	70.71	$	3.81	5	%
Wholesale	$	25.23	$	12.06	$	13.17	*		$	22.65	$	14.40	$	8.25	57	%

Heating degree days	677		588		89		15	%	3,992		3,799		193		5	%
Cooling degree days	421		426		(5)		(1)	%	421		426		(5)		(1)	%

Sources of energy (GWhs)(1):
Wind and other(2)	7,364		5,877		1,487		25	%	15,654		11,999		3,655		30	%
Coal	1,481		2,791		(1,310)		(47)		3,840		5,693		(1,853)		(33)
Nuclear	863		1,009		(146)		(14)		1,783		1,904		(121)		(6)
Natural gas	397		336		61		18		631		479		152		32
Total energy generated	10,105		10,013		92		1		21,908		20,075		1,833		9
Energy purchased	1,315		842		473		56		2,277		1,860		417		22
Total	11,420		10,855		565		5	%	24,185		21,935		2,250		10	%

Average cost of energy per MWh:
Energy generated(3)	$	6.34	$	6.43	$	(0.09)	(1)	%	$	5.92	$	6.29	$	(0.37)	(6)	%
Energy purchased	$	83.45	$	45.70	$	37.75	83	%	$	74.41	$	68.55	$	5.86	9	%

* Not meaningful.

(1) GWh amounts are net of energy used by the related generating facilities.

(2) All or some of the renewable energy attributes associated with generation from these generating facilities may be: (a) used in future years to comply with RPS or other regulatory requirements or (b) sold to third parties in the form of renewable energy credits or other environmental commodities.

(3) The average cost per MWh of energy generated includes only the cost of fuel associated with the generating facilities.

102

Natural Gas Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	171	$	106	$	65	61	%	$	567	$	618	$	(51)	(8)	%
Natural gas purchased for resale	120		57		63		*		418		489		(71)		(15)
Utility margin	$	51	$	49	$	2	4	%	$	149	$	129	$	20	16	%

Throughput (000's Dths):
Residential	7,500		6,272		1,228		20	%	34,599		31,554		3,045		10	%
Commercial	3,599		3,011		588		20		16,059		14,744		1,315		9
Industrial	1,465		1,069		396		37		3,309		2,506		803		32
Other	16		11		5		45		51		48		3		6
Total retail sales	12,580		10,363		2,217		21		54,018		48,852		5,166		11
Wholesale sales	4,912		5,817		(905)		(16)		17,144		16,590		554		3
Total sales	17,492		16,180		1,312		8		71,162		65,442		5,720		9
Natural gas transportation service	22,491		26,853		(4,362)		(16)		53,804		56,493		(2,689)		(5)
Total throughput	39,983		43,033		(3,050)		(7)	%	124,966		121,935		3,031		2	%

Average number of retail customers (in thousands)	781		776		5		1	%	784		777		7		1	%

Average revenue per retail Dth sold	$	10.08	$	7.81	$	2.27	29	%	$	8.36	$	10.88	$	(2.52)	(23)	%

Heating degree days	734		625		109		17	%	4,219		3,926		293		7	%

Average cost of natural gas per retail Dth sold	$	6.78	$	3.99	$	2.79	70	%	$	6.03	$	8.62	$	(2.59)	(30)	%

Combined retail and wholesale average cost of natural gas per Dth sold	$	6.86	$	3.54	$	3.32	94	%	$	5.87	$	7.47	$	(1.60)	(21)	%

* Not meaningful.

Quarter Ended June 30, 2022 Compared to Quarter Ended June 30, 2021

MidAmerican Energy -

Electric utility margin increased $68 million, or 14%, for the second quarter of 2022 compared to 2021, primarily due to:

•a $63 million increase in wholesale utility margin due to higher margins per unit of $61 million, reflecting higher market prices and lower energy costs, and higher volumes of 7.1%; and

•a $6 million increase in retail utility margin primarily due to $11 million from higher customer usage; $6 million due to price impacts from changes in sales mix; and $1 million from the favorable impact of weather; partially offset by $12 million, net of energy costs, from lower recoveries through bill riders (offset in operations and maintenance expense and income tax benefit). Retail customer volumes increased 3.3%.

Natural gas utility margin increased $2 million, or 4%, for the second quarter of 2022 compared to 2021 primarily due to:

•a $5 million increase from higher average prices; partially offset by

•a $3 million decrease from higher refunds related to amortization of excess accumulated deferred income taxes arising from 2017 Tax Reform (offset in income tax benefit).

103

Operations and maintenance increased $16 million, or 9%, for the second quarter of 2022 compared to 2021 primarily due to higher steam generation maintenance costs of $9 million and higher electric distribution and transmission costs of $10 million, partially offset by lower gas distribution costs of $3 million.

Depreciation and amortization increased $68 million, or 33%, for the second quarter of 2022 compared to 2021 primarily due to $54 million from higher Iowa revenue sharing accruals, $18 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects and $8 million from wind-powered generating facilities and other plant placed in-service, partially offset by $12 million from a regulatory mechanism deferring certain depreciation expense in 2022.

Interest expense increased $4 million, or 5%, for the second quarter of 2022 compared to 2021 due to higher interest expense from a July 2021 long-term debt issuance and higher interest rates on variable rate long-term debt.

Allowance for borrowed and equity funds increased $9 million, or 90%, for the second quarter of 2022 compared to 2021 primarily due to higher construction work-in-progress balances related to wind- and solar-powered generation.

Other, net decreased $27 million, or 180%, for the second quarter of 2022 compared to 2021 primarily due to unfavorable investment earnings, largely attributable to lower cash surrender values of corporate-owned life insurance policies, and higher non-service costs of employee benefit plans.

Income tax benefit increased $29 million, or 18%, for the second quarter of 2022 compared to 2021 primarily due to higher PTCs and lower pretax income, partially offset by state income tax impacts and the effects of ratemaking. PTCs for the second quarter of 2022 and 2021 totaled $185 million and $146 million, respectively.

MidAmerican Funding -

Income tax benefit increased $28 million, or 18%, for the second quarter of 2022 compared to 2021 principally due to the factors discussed for MidAmerican Energy.

First Six Months of 2022 Compared to First Six Months of 2021

MidAmerican Energy -

Electric utility margin increased $157 million, or 18%, for the first six months of 2022 compared to 2021, due to:

•a $127 million increase in wholesale utility margin due to higher margins per unit of $119 million, reflecting higher market prices and lower energy costs, and higher volumes of 19.5%; and

•a $31 million increase in retail utility margin primarily due to $28 million from higher customer usage; $4 million due to price impacts from changes in sales mix; and $2 million from the favorable impact of weather; partially offset by $3 million, net of energy costs, from lower recoveries through bill riders (offset in operations and maintenance expense and income tax benefit). Retail customer volumes increased 4.4%.

Natural gas utility margin increased $20 million, or 16%, for the first six months of 2022 compared to 2021 primarily due to:

•a $10 million increase from higher average prices primarily due to the timing of recoveries through a capital tracker mechanism;

•a $5 million increase from lower refunds related to amortization of excess accumulated deferred income taxes arising from 2017 Tax Reform (offset in income tax benefit); and

•a $5 million increase from the favorable impact of weather.

Operations and maintenance increased $15 million, or 4%, for the first six months of 2022 compared to 2021 primarily due to higher steam generation maintenance costs of $11 million and higher electric distribution and transmission costs of $10 million, partially offset by lower energy efficiency program expense of $4 million (offset in operating revenue) and lower gas distribution costs of $3 million.

104

Depreciation and amortization increased $111 million, or 27%, for the first six months of 2022 compared to 2021 primarily due to $96 million from higher Iowa revenue sharing accruals, $24 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects and $15 million from wind-powered generating facilities and other plant placed in-service, partially offset by $25 million from a regulatory mechanism deferring certain depreciation expense in 2022.

Interest expense increased $8 million, or 5%, for the first six months of 2022 compared to 2021 due to higher interest expense from a July 2021 long-term debt issuance and higher interest rates on variable rate long-term debt.

Allowance for borrowed and equity funds increased $20 million, or 111%, for the first six months of 2022 compared to 2021 primarily due to higher construction work-in-progress balances related to wind- and solar-powered generation.

Other, net decreased $41 million, or 158%, for the first six months of 2022 compared to 2021 primarily due to unfavorable investment earnings, largely attributable to lower cash surrender values of corporate-owned life insurance policies, and higher non-service costs of employee benefit plans.

Income tax benefit increased $81 million, or 26%, for the first six months of 2022 compared to 2021 primarily due to higher PTCs, partially offset by the effects of ratemaking, state income tax impacts and higher pretax income. PTCs for the first six months of 2022 and 2021 totaled $388 million and $297 million, respectively.

MidAmerican Funding -

Income tax benefit increased $80 million, or 25%, for the first six months of 2022 compared to 2021 principally due to the factors discussed for MidAmerican Energy.

Liquidity and Capital Resources

As of June 30, 2022, the total net liquidity for MidAmerican Energy and MidAmerican Funding was as follows (in millions):


MidAmerican Energy:
Cash and cash equivalents	$	495

Credit facilities, maturing 2023 and 2025	1,505
Less:

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

MidAmerican Energy total net liquidity	$	1,630

MidAmerican Funding:
MidAmerican Energy total net liquidity	$	1,630
Cash and cash equivalents	2
MHC, Inc. credit facility, maturing 2023	4
MidAmerican Funding total net liquidity	$	1,636

105

Operating Activities

MidAmerican Energy's net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021, were $1,125 million and $721 million, respectively. MidAmerican Funding's net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021, were $1,118 million and $715 million, respectively. Cash flows from operating activities reflect higher utility margins for MidAmerican Energy's regulated electric and natural gas businesses and lower payments to vendors, partially offset by lower income tax receipts and higher asset retirement obligation settlements. Higher utility margins are largely attributable to the recovery of higher natural gas costs caused by the February 2021 polar vortex weather event.

The timing of MidAmerican Energy's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods and assumptions for each payment date.

Investing Activities

MidAmerican Energy's net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021, were $(860) million and $(726) million, respectively. MidAmerican Funding's net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021, were $(860) million and $(726) million, respectively. Net cash flows from investing activities consist almost entirely of capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures. Purchases and proceeds related to marketable securities substantially consist of activity within the Quad Cities Generating Station nuclear decommissioning trust and other trust investments.

Financing Activities

MidAmerican Energy's net cash flows from financing activities for the six-month periods ended June 30, 2022 and 2021 were $(1) million and $(2) million, respectively. MidAmerican Funding's net cash flows from financing activities for the six-month periods ended June 30, 2022 and 2021, were $7 million and $4 million, respectively. MidAmerican Funding received $8 million and $6 million in 2022 and 2021, respectively, through its note payable with BHE.

Debt Authorizations and Related Matters

Short-term Debt

MidAmerican Energy has authority from the FERC to issue, through April 2, 2024, commercial paper and bank notes aggregating $1.5 billion. MidAmerican Energy has a $1.5 billion unsecured credit facility expiring in June 2025. The credit facility, which supports MidAmerican Energy's commercial paper program and its variable-rate tax-exempt bond obligations and provides for the issuance of letters of credit, has a variable interest rate based on the Secured Overnight Financing Rate, plus a spread that varies based on MidAmerican Energy's credit ratings for senior unsecured long-term debt securities. Additionally, MidAmerican Energy has a $5 million unsecured credit facility for general corporate purposes.

Long-term Debt and Preferred Stock

MidAmerican Energy currently has an effective automatic registration statement with the SEC to issue an indeterminate amount of long-term debt securities and preferred stock through June 13, 2024. MidAmerican Energy has authorization from the FERC to issue, through June 30, 2023, long-term debt securities up to an aggregate of $2.0 billion and preferred stock up to an aggregate of $500 million and from the Illinois Commerce Commission to issue, through May 25, 2025, long-term debt securities up to an aggregate of $2.2 billion and preferred stock up to an aggregate of $500 million. Additionally, MidAmerican Energy has authority from the Illinois Commerce Commission through October 15, 2024, to issue $750 million of long-term debt securities for the purpose of refinancing $250 million of its 3.70% Senior notes due September 2023 and $500 million of its 2.40% Senior notes due October 2024.

106

Future Uses of Cash

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

Capital Expenditures

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

MidAmerican Energy's historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022

Wind generation	$	286	$	244	$	734
Electric distribution	96		125		274
Electric transmission	54		46		158
Solar generation	63		77		140
Other	221		370		607
Total	$	720	$	862	$	1,913

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

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

◦Construction of wind-powered generating facilities totaling $5 million and $172 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for the construction of additional wind-powered generating facilities totals $106 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities totaling $214 million and $82 million for the six-month periods ended June 30, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals $314 million for the remainder of 2022. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 593 MWs of current repowering projects not in-service as of June 30, 2022, 292 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.

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

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

•Solar generation includes the construction of solar-powered generating facilities totaling 141 MWs of small- and utility-scale solar generation, with total spend of $77 million and $63 million for the six-month periods ended June 30, 2022 and 2021, respectively and planned spending of $63 million for the remainder of 2022.

107

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

Material Cash Requirements

As of June 30, 2022, there have been no material changes in MidAmerican Energy's and MidAmerican Funding's cash requirements from the information provided in Item 7 of their Annual Report on Form 10-K for the year ended December 31, 2021.

Quad Cities Generating Station Operating Status

As a result, the MOPR applied to Quad Cities Station in the capacity auction for the 2022-2023 planning year, which prevented Quad Cities Station from clearing in that capacity auction.

108

Regulatory Matters

MidAmerican Energy is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding MidAmerican Energy's current regulatory matters.

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact MidAmerican Energy's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. MidAmerican Energy believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and MidAmerican Energy is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, derivatives, impairment of goodwill and long-lived assets, pension and other postretirement benefits, income taxes and revenue recognition - unbilled revenue. For additional discussion of MidAmerican Energy's and MidAmerican Funding's critical accounting estimates, see Item 7 of their Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in MidAmerican Energy's and MidAmerican Funding's assumptions regarding critical accounting estimates since December 31, 2021.

109

Nevada Power Company and its subsidiaries

Consolidated Financial Section

110

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Nevada Power Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Nevada Power Company and subsidiaries ("Nevada Power") as of June 30, 2022, the related consolidated statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Nevada Power as of December 31, 2021, and the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

August 5, 2022

111

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	42	$	33
Trade receivables, net	369		227
Inventories	68		64

Regulatory assets	401		291


Other current assets	62		86
Total current assets	942		701

Property, plant and equipment, net	7,115		6,891

Regulatory assets	748		728
Other assets	414		432

Total assets	$	9,219	$	8,752

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	433	$	242
Accrued interest	33		32




Short-term debt	—		180
Regulatory liabilities	46		49
Customer deposits	44		44

Derivative contracts	122		55
Other current liabilities	91		91
Total current liabilities	769		693

Long-term debt	2,800		2,499
Finance lease obligations	302		310
Regulatory liabilities	1,075		1,100
Deferred income taxes	816		782
Other long-term liabilities	328		338
Total liabilities	6,090		5,722

Commitments and contingencies (Note 9)

Shareholder's equity:
Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding	—		—
Additional paid-in capital	2,333		2,308
Retained earnings	798		724
Accumulated other comprehensive loss, net	(2)		(2)
Total shareholder's equity	3,129		3,030

Total liabilities and shareholder's equity	$	9,219	$	8,752

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

112

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Operating revenue	$	639	$	559	$	1,054	$	929

Operating expenses:
Cost of fuel and energy	336		252		548		417
Operations and maintenance	75		77		140		140
Depreciation and amortization	103		100		206		201
Property and other taxes	12		12		25		24
Total operating expenses	526		441		919		782

Operating income	113		118		135		147

Other income (expense):
Interest expense	(39)		(39)		(77)		(77)
Allowance for borrowed funds	2		1		3		2
Allowance for equity funds	2		2		5		3
Interest and dividend income	9		3		18		8
Other, net	(1)		6		—		10
Total other income (expense)	(27)		(27)		(51)		(54)

Income before income tax expense	86		91		84		93
Income tax expense	10		9		10		9
Net income	$	76	$	82	$	74	$	84

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

113

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions, except shares)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Retained		Comprehensive		Shareholder's
	Shares	Amount		Capital		Earnings		Loss, Net		Equity

Balance, March 31, 2021	1,000	$	—	$	2,308	$	636	$	(3)	$	2,941
Net income	—	—		—		82		—		82
Dividends declared	—	—		—		(13)		—		(13)

Balance, June 30, 2021	1,000	$	—	$	2,308	$	705	$	(3)	$	3,010

Balance, December 31, 2020	1,000	$	—	$	2,308	$	634	$	(3)	$	2,939
Net income	—	—		—		84		—		84
Dividends declared	—	—		—		(13)		—		(13)

Balance, June 30, 2021	1,000	$	—	$	2,308	$	705	$	(3)	$	3,010

Balance, March 31, 2022	1,000	$	—	$	2,308	$	722	$	(2)	$	3,028
Net income	—	—		—		76		—		76

Contributions	—	—		25		—		—		25

Balance, June 30, 2022	1,000	$	—	$	2,333	$	798	$	(2)	$	3,129

Balance, December 31, 2021	1,000	$	—	$	2,308	$	724	$	(2)	$	3,030
Net income	—	—		—		74		—		74

Contributions	—	—		25		—		—		25

Balance, June 30, 2022	1,000	$	—	$	2,333	$	798	$	(2)	$	3,129

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

114

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	74	$	84
Adjustments to reconcile net income to net cash flows from operating activities:


Depreciation and amortization	206		201
Allowance for equity funds	(5)		(3)
Changes in regulatory assets and liabilities	(14)		(17)
Deferred income taxes and amortization of investment tax credits	12		(20)
Deferred energy	(159)		(1)
Amortization of deferred energy	46		7
Other, net	10		—
Changes in other operating assets and liabilities:
Trade receivables and other assets	(154)		(83)
Inventories	(4)		5
Accrued property, income and other taxes	18		21
Accounts payable and other liabilities	194		116
Net cash flows from operating activities	224		310

Cash flows from investing activities:
Capital expenditures	(350)		(237)



Net cash flows from investing activities	(350)		(237)

Cash flows from financing activities:
Proceeds from long-term debt	300		—

Net repayment of short-term debt	(180)		—

Contributions from parent	25		—
Dividends paid	—		(13)
Other, net	(9)		(8)
Net cash flows from financing activities	136		(21)

Net change in cash and cash equivalents and restricted cash and cash equivalents	10		52
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	45		36
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	55	$	88

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

115

NEVADA POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2022 and for the three- and six-month periods ended June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in Nevada Power's Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Nevada Power's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022.

(2) Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of funds restricted by the Public Utilities Commission of Nevada ("PUCN") for a certain renewable energy contract. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021
Cash and cash equivalents	$	42	$	33
Restricted cash and cash equivalents included in other current assets	13		12
Total cash and cash equivalents and restricted cash and cash equivalents	$	55	$	45

116

(3) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
	Depreciable Life	June 30,		December 31,
		2022		2021
Utility plant:
Generation	30 - 55 years	$	3,879	$	3,793
Transmission	45 - 70 years	1,527		1,503
Distribution	20 - 65 years	4,021		3,920
General and intangible plant	5 - 65 years	834		836
Utility plant		10,261		10,052
Accumulated depreciation and amortization		(3,517)		(3,406)
Utility plant, net		6,744		6,646
Other non-regulated, net of accumulated depreciation and amortization	45 years	1		1
Plant, net		6,745		6,647
Construction work-in-progress		370		244
Property, plant and equipment, net		$	7,115	$	6,891

(4) Recent Financing Transactions

Long-Term Debt

Credit Facilities

In June 2022, Nevada Power amended and restated its existing $400 million secured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from the London Interbank Offered Rate to SOFR.

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	(10)		(11)		(10)		(11)



Other	1		—		1		—
Effective income tax rate	12	%	10	%	12	%	10	%

Effects of ratemaking is primarily attributable to the recognition of excess deferred income taxes related to the 2017 Tax Cuts

and Jobs Act pursuant to an order issued by the PUCN effective January 1, 2021.

117

Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, Nevada Power's provision for federal income tax has been computed on a separate return basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. For the six-month period ended June 30, 2022, Nevada Power received net cash payments for federal income tax from BHE totaling $21 million. For the six-month period ended June 30, 2021, Nevada Power made net cash payments for federal income tax to BHE totaling $15 million.

(6) Employee Benefit Plans

Nevada Power is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Nevada Power. Amounts attributable to Nevada Power were allocated from NV Energy based upon the current, or in the case of retirees, previous, employment location. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net.

Amounts receivable from (payable to) NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):


	As of
	June 30,		December 31,
	2022		2021
Qualified Pension Plan:
Other non-current assets	$	42	$	42



Non-Qualified Pension Plans:

Other current liabilities	(1)		(1)
Other long-term liabilities	(8)		(8)

Other Postretirement Plans:
Other non-current assets	8		8

(7) Risk Management and Hedging Activities

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

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

118

There have been no significant changes in Nevada Power's accounting policies related to derivatives. Refer to Note 8 for additional information on derivative contracts.

The following table, which excludes contracts that have been designated as normal under the normal purchases and normal sales exception afforded by GAAP, summarizes the fair value of Nevada Power's derivative contracts, on a gross basis, and reconciles those amounts presented on a net basis on the Consolidated Balance Sheets (in millions):


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

As of June 30, 2022
Not designated as hedging contracts(1):
Commodity assets	$	—	$	1	$	—	$	—	$	1
Commodity liabilities	—		—		(122)		(54)		(176)





Total derivative - net basis	$	—	$	1	$	(122)	$	(54)	$	(175)

As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets	$	4	$	—	$	—	$	—	$	4
Commodity liabilities	—		—		(55)		(62)		(117)




Total derivative - net basis	$	4	$	—	$	(55)	$	(62)	$	(113)

(1)Nevada Power's commodity derivatives not designated as hedging contracts are included in regulated rates. As of June 30, 2022 a regulatory asset of $175 million was recorded related to the net derivative liability of $175 million. As of December 31, 2021 a regulatory asset of $113 million was recorded related to the net derivative liability of $113 million.

Derivative Contract Volumes

The following table summarizes the net notional amounts of outstanding commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of (in millions):


	Unit of	June 30,	December 31,
	Measure	2022	2021

Electricity purchases	Megawatt hours	3	1
Natural gas purchases	Decatherms	113	119

Credit Risk

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

119

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels "credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Nevada Power's creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2022, Nevada Power's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.

The aggregate fair value of Nevada Power's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $7 million and $6 million as of June 30, 2022 and December 31, 2021, respectively, which represents the amount of collateral to be posted if all credit risk related contingent features for derivative contracts in liability positions had been triggered. Nevada Power's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation or other factors.

(8) Fair Value Measurements

The carrying value of Nevada Power's cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. Nevada Power has various financial assets and liabilities that are measured at fair value on the Consolidated Balance Sheets 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.

120

The following table presents Nevada Power's 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 June 30, 2022:
Assets:
Commodity derivatives	$	—	$	—	$	1	$	1
Money market mutual funds	34		—		—		34
Investment funds	3		—		—		3
	$	37	$	—	$	1	$	38

Liabilities - commodity derivatives	$	—	$	—	$	(176)	$	(176)

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)

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 June 30, 2022 and 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 investment funds are stated at fair value. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value.

121

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Beginning balance	$	(168)	$	27	$	(113)	$	15
Changes in fair value recognized in regulatory assets	(21)		(6)		(77)		5

Settlements	14		4		15		5
Ending balance	$	(175)	$	25	$	(175)	$	25

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


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	2,800	$	2,807	$	2,499	$	3,067

(9) Commitments and Contingencies

Legal Matters

Nevada Power is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. Nevada Power does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Nevada Power's current and future operations. Nevada Power believes it is in material compliance with all applicable laws and regulations.

122

(10) Revenue from Contracts with Customers

The following table summarizes Nevada Power's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Customer Revenue:
Retail:
Residential	$	353	$	326	$	566	$	521
Commercial	131		110		226		194
Industrial	124		95		203		158
Other	3		3		4		6
Total fully bundled	611		534		999		879
Distribution only service	5		5		10		10
Total retail	616		539		1,009		889
Wholesale, transmission and other	18		15		34		29
Total Customer Revenue	634		554		1,043		918
Other revenue	5		5		11		11
Total revenue	$	639	$	559	$	1,054	$	929

123

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

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

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

Net income for the second quarter of 2022 was $76 million, a decrease of $6 million, or 7%, compared to 2021 primarily due to $7 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, $4 million of lower utility margin and $3 million of higher depreciation and amortization, mainly due to higher plant placed in-service. Utility margin decreased primarily due to unfavorable price impacts from changes in sales mix, the unfavorable impact of weather and lower other retail revenue, partially offset by higher regulatory-related revenue deferrals, an increase in the average number of customers and favorable changes in customer usage patterns. These decreases are offset by $6 million of higher interest and dividend income, mainly from carrying charges on regulatory balances, and $2 million of lower operations and maintenance expenses, mainly due to lower plant operations and maintenance expenses, partially offset by higher earning sharing. Energy generated decreased 17% for the second quarter of 2022 compared to 2021 due to lower natural gas-fueled generation. Wholesale electricity sales volumes increased 136% and purchased electricity volumes increased 17%.

Net income for the first six months of 2022 was $74 million, a decrease of $10 million, or 12%, compared to 2021 primarily due to $10 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, $6 million of lower utility margin and $5 million of higher depreciation and amortization, mainly due to higher plant placed in-service. Utility margin decreased primarily due to unfavorable price impacts from changes in sales mix, the unfavorable impact of weather and lower other retail revenue, partially offset by higher regulatory-related revenue deferrals, an increase in the average number of customers and favorable changes in customer usage patterns. These decreases are offset by $10 million of higher interest and dividend income, mainly from carrying charges on regulatory balances. Energy generated decreased 13% for the first six months of 2022 compared to 2021 primarily due to lower natural gas-fueled generation. Wholesale electricity sales volumes increased 94% and purchased electricity volumes increased 22%.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, utility margin, to help evaluate results of operations. Utility margin is calculated as electric operating revenue less cost of fuel and energy, which are captions presented on the Consolidated Statements of Operations.

Nevada Power's cost of fuel and energy are directly recovered from its customers through regulatory recovery mechanisms and as a result, changes in Nevada Power's expenses result in comparable changes to revenue. As such, management believes utility margin more appropriately and concisely explains profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.

124

Utility margin is not a measure calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income which is the most directly comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin:
Operating revenue	$	639	$	559	$	80	14	%	$	1,054	$	929	$	125	13	%
Cost of fuel and energy	336		252		84		33		548		417		131		31
Utility margin	303		307		(4)		(1)		506		512		(6)		(1)
Operations and maintenance	75		77		(2)		(3)		140		140		—		—
Depreciation and amortization	103		100		3		3		206		201		5		2
Property and other taxes	12		12		—		—		25		24		1		4
Operating income	$	113	$	118	$	(5)	(4)	%	$	135	$	147	$	(12)	(8)	%

125

Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	639	$	559	$	80	14	%	$	1,054	$	929	$	125	13	%
Cost of fuel and energy	336		252		84		33		548		417		131		31
Utility margin	$	303	$	307	$	(4)	(1)	%	$	506	$	512	$	(6)	(1)	%

Sales (GWhs):
Residential	2,612		2,807		(195)		(7)	%	4,197		4,394		(197)		(4)	%
Commercial	1,272		1,271		1		—		2,270		2,225		45		2
Industrial	1,409		1,310		99		8		2,584		2,367		217		9
Other	46		45		1		2		92		92		—		—
Total fully bundled(1)	5,339		5,433		(94)		(2)		9,143		9,078		65		1
Distribution only service	661		620		41		7		1,230		1,136		94		8
Total retail	6,000		6,053		(53)		(1)		10,373		10,214		159		2
Wholesale	210		89		121		*		335		173		162		94
Total GWhs sold	6,210		6,142		68		1	%	10,708		10,387		321		3	%

Average number of retail customers (in thousands)	1,000		982		18		2	%	997		980		17		2	%





Average revenue per MWh:
Retail - fully bundled(1)	$	114.36	$	98.10	$	16.26	17	%	$	109.26	$	96.86	$	12.40	13	%

Wholesale	$	34.36	$	42.94	$	(8.58)	(20)	%	$	37.55	$	46.09	$	(8.54)	(19)	%

Heating degree days	31		14		17		*		985		1,008		(23)		(2)	%
Cooling degree days	1,322		1,477		(155)		(10)	%	1,371		1,483		(112)		(8)	%

Sources of energy (GWhs)(2)(3):
Natural gas	2,935		3,547		(612)		(17)	%	5,313		6,081		(768)		(13)	%

Renewables	20		20		—		—		34		36		(2)		(6)
Total energy generated	2,955		3,567		(612)		(17)		5,347		6,117		(770)		(13)
Energy purchased	2,472		2,104		368		17		4,233		3,459		774		22
Total	5,427		5,671		(244)		(4)	%	9,580		9,576		4		—	%

Average cost of energy per MWh(4):
Energy generated	$	49.65	$	21.82	$	27.83	*		$	46.19	$	18.96	$	27.23	*
Energy purchased	$	76.63	$	82.70	$	(6.07)	(7)	%	$	71.07	$	87.07	$	(16.00)	(18)	%

* Not meaningful

(1) Fully bundled includes sales to customers for combined energy, transmission and distribution services.

(2) The average cost of energy per MWh and sources of energy excludes 360 GWhs and 249 GWhs of gas generated energy that is purchased at cost by related parties for the second quarter of 2022 and 2021, respectively. The average cost of energy per MWh and sources of energy excludes 784 GWhs and 932 GWhs of gas generated energy that is purchased at cost by related parties for the first six months of 2022 and 2021, respectively.

(3) GWh amounts are net of energy used by the related generating facilities.

(4) The average cost of energy per MWh includes only the cost of fuel associated with the generating facilities, purchased power and deferrals.

126

Quarter Ended June 30, 2022 Compared to Quarter Ended June 30, 2021

Utility margin decreased $4 million, or 1%, for the second quarter of 2022 compared to 2021 primarily due to:

•$7 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix and lower retail customer volumes. Retail customer volumes, including distribution only service customers, decreased 0.9% primarily due to the unfavorable impact of weather, offset by an increase in the average number of customers and favorable changes in customer usage patterns;

•$3 million of lower energy efficiency program rates (offset in operations and maintenance expense); and

•$1 million of lower other retail revenue.

The decrease in utility margin was offset by:

•$7 million of higher regulatory-related revenue deferrals.

Operations and maintenance decreased $2 million, or 3%, for the second quarter of 2022 compared to 2021 primarily due to lower energy efficiency program costs (offset in operating revenue) and lower plant operations and maintenance expenses, partially offset by higher earnings sharing.

Depreciation and amortization increased $3 million, or 3%, for the second quarter of 2022 compared to 2021 primarily due to higher plant placed in-service.

Interest and dividend income increased $6 million for the second quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net is unfavorable $7 million for the second quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Utility margin decreased $6 million, or 1%, for the first six months of 2022 compared to 2021 primarily due to:

•$5 million of lower energy efficiency program rates (offset in operations and maintenance expense);

•$4 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 1.6% primarily due to an increase in the average number of customers and favorable changes in customer usage patterns, offset by the unfavorable impact of weather; and

•$3 million of lower other retail revenue.

The decrease in utility margin was offset by:

•$5 million of higher regulatory-related revenue deferrals; and

•$1 million of higher transmission and wholesale revenue.

Operations and maintenance was consistent for the first six months of 2022 compared to 2021 primarily due to higher earnings sharing and higher plant operations and maintenance expenses, offset by lower energy efficiency program costs (offset in operating revenue).

Depreciation and amortization increased $5 million, or 2%, for the first six months of 2022 compared to 2021 primarily due to higher plant placed in-service.

Interest and dividend income increased $10 million for the first six months of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net is unfavorable $10 million for the first six months of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

127

Liquidity and Capital Resources

As of June 30, 2022, Nevada Power's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	42
Credit facility	400


Total net liquidity	442


Credit facility:
Maturity date	2025

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021 were $224 million and $310 million, respectively. The change was primarily due to higher payments related to fuel and energy costs and the timing of payments for operating costs, partially offset by higher collections from customers and lower payments for income taxes.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021 were $(350) million and $(237) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month periods ended June 30, 2022 and 2021 were $136 million and $(21) million, respectively. The change was primarily due to higher proceeds from the issuance of long-term debt and contributions from NV Energy, Inc., partially offset by higher repayments of short-term debt.

Long-Term Debt

In January 2022, Nevada Power entered into a $300 million secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest at variable rates based on the Secured Overnight Financing Rate or a base rate, at Nevada Power's option, plus a pricing margin. In January 2022, Nevada Power borrowed $200 million under the facility at an initial interest rate of 0.55%. In May 2022, Nevada Power drew the remaining $100 million available under the facility at an initial interest rate of 1.24%. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.

Debt Authorizations

Nevada Power currently has financing authority from the PUCN consisting of the ability to: (1) establish debt issuances limited to a debt ceiling of $3.8 billion (excluding borrowings under Nevada Power's $400 million secured credit facility); and (2) maintain a revolving credit facility of up to $1.3 billion. Nevada Power currently has an effective automatic shelf registration statement with the SEC to issue an indeterminate amount of general and refunding mortgage securities through October 2022.

Future Uses of Cash

Nevada Power has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the use of its secured revolving credit facility, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which Nevada Power has access to external financing depends on a variety of factors, including regulatory approvals, Nevada Power's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

128

Capital Expenditures

Capital expenditure needs are reviewed regularly by management and may change significantly as a result of these reviews, which may consider, among other factors, changes in environmental and other rules and regulations; impacts to customers' rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; load projections; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital. Prudently incurred expenditures for compliance-related items such as pollution control technologies, replacement generation and associated operating costs are generally incorporated into Nevada Power's regulated retail rates.

Historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022

Electric distribution	$	87	$	108	$	234
Electric transmission	25		39		141
Solar generation	5		23		90
Other	120		180		359
Total	$	237	$	350	$	824

Nevada Power received PUCN approval through its recent IRP filings for an increase in solar generation and electric transmission. Nevada Power has included estimates from its latest IRP filing in its forecast capital expenditures for 2022. These estimates may change as a result of the RFP process. Nevada Power's historical and forecast capital expenditures include the following:

•Electric distribution includes both growth projects and operating expenditures consisting of routine expenditures for distribution needed to serve existing and expected demand.

•Electric transmission includes both growth projects and operating expenditures. Growth projects primarily relate to the Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Operating expenditures consist of routine expenditures for transmission and other infrastructure needed to serve existing and expected demand.

•Solar generation investment includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023.

•Other includes both growth projects and operating expenditures consisting of turbine upgrades at several generating facilities, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of June 30, 2022, there have been no material changes in cash requirements from the information provided in Item 7 of Nevada Power's Annual Report on Form 10-K for the year ended December 31, 2021, other than those disclosed in Note 4 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

129

Regulatory Matters

Nevada Power is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding Nevada Power's current regulatory matters.

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Nevada Power's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. Nevada Power believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Nevada Power is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, derivatives, impairment of long-lived assets, income taxes and revenue recognition - unbilled revenue. For additional discussion of Nevada Power's critical accounting estimates, see Item 7 of Nevada Power's Annual Report on Form 10‑K for the year ended December 31, 2021. There have been no significant changes in Nevada Power's assumptions regarding critical accounting estimates since December 31, 2021.

130

Sierra Pacific Power Company and its subsidiaries

Consolidated Financial Section

131

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Sierra Pacific Power Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Sierra Pacific Power Company and subsidiaries ("Sierra Pacific") as of June 30, 2022, the related consolidated statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Sierra Pacific as of December 31, 2021, and the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

August 5, 2022

132

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


	As of
	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	17	$	10
Trade receivables, net	127		128

Inventories	75		65

Regulatory assets	207		177

Other current assets	25		35
Total current assets	451		415

Property, plant and equipment, net	3,476		3,340

Regulatory assets	282		263
Other assets	206		205

Total assets	$	4,415	$	4,223

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	177	$	147

Accrued property, income and other taxes	18		16
Short-term debt	—		159


Regulatory liabilities	18		19
Customer deposits	16		15
Derivative contracts	38		16
Other current liabilities	48		42
Total current liabilities	315		414

Long-term debt	1,148		1,164

Regulatory liabilities	435		444
Deferred income taxes	413		402
Other long-term liabilities	258		264
Total liabilities	2,569		2,688

Commitments and contingencies (Note 9)

Shareholder's equity:
Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding	—		—
Additional paid-in capital	1,451		1,111
Retained earnings	396		425
Accumulated other comprehensive loss, net	(1)		(1)
Total shareholder's equity	1,846		1,535

Total liabilities and shareholder's equity	$	4,415	$	4,223

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

133

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	230	$	189	$	457	$	370
Regulated natural gas	28		20		80		59
Total operating revenue	258		209		537		429

Operating expenses:
Cost of fuel and energy	129		93		253		175
Cost of natural gas purchased for resale	16		8		50		29
Operations and maintenance	47		41		88		77
Depreciation and amortization	37		36		73		72
Property and other taxes	6		6		12		12
Total operating expenses	235		184		476		365

Operating income	23		25		61		64

Other income (expense):
Interest expense	(14)		(13)		(27)		(27)
Allowance for borrowed funds	—		1		1		1
Allowance for equity funds	2		2		4		3
Interest and dividend income	4		1		7		3
Other, net	—		2		2		6
Total other income (expense)	(8)		(7)		(13)		(14)

Income before income tax expense	15		18		48		50
Income tax expense	2		1		7		5
Net income	$	13	$	17	$	41	$	45

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

134

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions, except shares)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Retained		Comprehensive		Shareholder's
	Shares	Amount		Capital		Earnings		Loss, Net		Equity

Balance, March 31, 2021	1,000	$	—	$	1,111	$	329	$	(1)	$	1,439
Net income	—	—		—		17		—		17


Balance, June 30, 2021	1,000	$	—	$	1,111	$	346	$	(1)	$	1,456

Balance, December 31, 2020	1,000	$	—	$	1,111	$	301	$	(1)	$	1,411
Net income	—	—		—		45		—		45


Balance, June 30, 2021	1,000	$	—	$	1,111	$	346	$	(1)	$	1,456

Balance, March 31, 2022	1,000	$	—	$	1,241	$	453	$	(1)	$	1,693
Net income	—	—		—		13		—		13
Dividends declared	—	—		—		(70)		—		(70)
Contributions	—	—		210		—		—		210

Balance, June 30, 2022	1,000	$	—	$	1,451	$	396	$	(1)	$	1,846

Balance, December 31, 2021	1,000	$	—	$	1,111	$	425	$	(1)	$	1,535
Net income	—	—		—		41		—		41
Dividends declared	—	—		—		(70)		—		(70)
Contributions	—	—		340		—		—		340

Balance, June 30, 2022	1,000	$	—	$	1,451	$	396	$	(1)	$	1,846

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

135

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	41	$	45
Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization	73		72
Allowance for equity funds	(4)		(3)
Changes in regulatory assets and liabilities	(8)		(20)
Deferred income taxes and amortization of investment tax credits	5		8
Deferred energy	(67)		(47)
Amortization of deferred energy	46		2
Other, net	2		(2)
Changes in other operating assets and liabilities:
Trade receivables and other assets	(1)		(1)
Inventories	(10)		10
Accrued property, income and other taxes	3		(1)
Accounts payable and other liabilities	28		29
Net cash flows from operating activities	108		92

Cash flows from investing activities:
Capital expenditures	(191)		(128)


Net cash flows from investing activities	(191)		(128)

Cash flows from financing activities:
Proceeds from long-term debt	249		—

Long-term debt reacquired	(265)		—
Net (repayment of) proceeds from short-term debt	(159)		29
Dividends paid	(70)		—
Contributions from parent	340		—
Other, net	(4)		(4)
Net cash flows from financing activities	91		25

Net change in cash and cash equivalents and restricted cash and cash equivalents	8		(11)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	16		26
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	24	$	15

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

136

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2022 and for the three- and six-month periods ended June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three- and six-month periods ended June 30, 2022 and 2021. The results of operations for the three- and six-month periods ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in Sierra Pacific's Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Sierra Pacific's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022.

(2) Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of funds restricted by the Public Utilities Commission of Nevada ("PUCN") for a certain renewable energy contract. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021
Cash and cash equivalents	$	17	$	10
Restricted cash and cash equivalents included in other current assets	7		6
Total cash and cash equivalents and restricted cash and cash equivalents	$	24	$	16

137

(3) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
	Depreciable Life	June 30,		December 31,
		2022		2021
Utility plant:
Electric generation	25 - 60 years	$	1,297	$	1,163
Electric transmission	50 - 100 years	976		940
Electric distribution	20 - 100 years	1,905		1,846
Electric general and intangible plant	5 - 70 years	213		204
Natural gas distribution	35 - 70 years	447		438
Natural gas general and intangible plant	5 - 70 years	15		14
Common general	5 - 70 years	376		370
Utility plant		5,229		4,975
Accumulated depreciation and amortization		(1,936)		(1,854)
Utility plant, net		3,293		3,121


Construction work-in-progress		183		219
Property, plant and equipment, net		$	3,476	$	3,340

(4) Recent Financing Transactions

Long-Term Debt

In April 2022, Sierra Pacific entered into a $200 million unsecured loan with NV Energy payable upon demand. The net proceeds were used to purchase certain tax-exempt refunding revenue bond obligations that were subject to mandatory purchase by Sierra Pacific in April 2022. The loan has an underlying variable interest rate based on 30-day U.S. dollar deposits offered on the London Interbank Offer Rate ("LIBOR") market plus a spread of 0.75%.

Credit Facilities

In June 2022, Sierra Pacific amended and restated its existing $250 million secured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to the Secured Overnight Financing Rate.

138

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	(8)		(11)		(7)		(9)

Income tax credits	—		(1)		—		—


Other	—		(3)		1		(2)
Effective income tax rate	13	%	6	%	15	%	10	%

Effects of ratemaking is primarily attributable to the recognition of excess deferred income taxes related to the 2017 Tax Cuts and Jobs Act pursuant to an order issued by the PUCN effective January 1, 2020.

Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, Sierra Pacific's provision for federal income tax has been computed on a separate return basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. For the six-month periods ended June 30, 2022 and 2021, Sierra Pacific made no net cash payments for federal income tax to BHE.

(6) Employee Benefit Plans

Sierra Pacific is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Sierra Pacific. Sierra Pacific contributed $2 million to the Other Postretirement Plans for the six-month period ended June 30, 2022. Amounts attributable to Sierra Pacific were allocated from NV Energy based upon the current, or in the case of retirees, previous, employment location. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net.

Amounts receivable from (payable to) NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):


	As of
	June 30,		December 31,
	2022		2021
Qualified Pension Plan:

Other non-current assets	$	64	$	62



Non-Qualified Pension Plans:


Other current liabilities	(1)		(1)
Other long-term liabilities	(7)		(7)

Other Postretirement Plans:



Other long-term liabilities	(8)		(10)

139

(7) Risk Management and Hedging Activities

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

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

There have been no significant changes in Sierra Pacific's accounting policies related to derivatives. Refer to Note 8 for additional information on derivative contracts.

The following table, which excludes contracts that have been designated as normal under the normal purchases and normal sales exception afforded by GAAP, summarizes the fair value of Sierra Pacific's derivative contracts, on a gross basis, and reconciles those amounts presented on a net basis on the Consolidated Balance Sheets (in millions):


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

As of June 30, 2022
Not designated as hedging contracts(1):
Commodity assets	$	—	$	1	$	—	$	—	$	1
Commodity liabilities	—		—		(38)		(17)		(55)




Total derivative - net basis	$	—	$	1	$	(38)	$	(17)	$	(54)

As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets	$	2	$	—	$	—	$	—	$	2
Commodity liabilities	—		—		(16)		(19)		(35)




Total derivative - net basis	$	2	$	—	$	(16)	$	(19)	$	(33)

(1)Sierra Pacific's commodity derivatives not designated as hedging contracts are included in regulated rates. As of June 30, 2022 a net regulatory asset of $54 million was recorded related to the net derivative liability of $54 million. As of December 31, 2021 a net regulatory asset of $33 million was recorded related to the net derivative liability of $33 million.

140

The following table summarizes the net notional amounts of outstanding commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of (in millions):


	Unit of	June 30,	December 31,
	Measure	2022	2021

Electricity purchases	Megawatt hours	1	1
Natural gas purchases	Decatherms	50	53

Credit Risk

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

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Sierra Pacific's creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2022, Sierra Pacific's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.

The aggregate fair value of Sierra Pacific's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $— million as of June 30, 2022 and December 31, 2021, which represents the amount of collateral to be posted if all credit risk related contingent features for derivative contracts in liability positions had been triggered. Sierra Pacific's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation or other factors.

(8) 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.

141

The following table presents Sierra Pacific's 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 June 30, 2022:
Assets:
Commodity derivatives	$	—	$	—	$	1	$	1
Money market mutual funds	14		—		—		14
Investment funds	1		—		—		1
	$	15	$	—	$	1	$	16

Liabilities - commodity derivatives	$	—	$	—	$	(55)	$	(55)

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)

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

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Beginning balance	$	(52)	$	12	$	(33)	$	7
Changes in fair value recognized in regulatory assets	(7)		(1)		(26)		4

Settlements	5		1		5		1
Ending balance	$	(54)	$	12	$	(54)	$	12

142

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


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	1,148	$	1,164	$	1,164	$	1,316

(9) Commitments and Contingencies

Legal Matters

Sierra Pacific is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. Sierra Pacific does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Sierra Pacific's current and future operations. Sierra Pacific believes it is in material compliance with all applicable laws and regulations.

143

(10) Revenue from Contracts with Customers

The following table summarizes Sierra Pacific's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class, including a reconciliation to Sierra Pacific's reportable segment information included in Note 11 (in millions):


	Three-Month Periods
	Ended June 30,
	2022						2021
	Electric		Natural Gas		Total		Electric		Natural Gas		Total
Customer Revenue:
Retail:
Residential	$	79	$	19	$	98	$	68	$	13	$	81
Commercial	82		6		88		64		5		69
Industrial	53		3		56		42		2		44
Other	1		—		1		1		—		1
Total fully bundled	215		28		243		175		20		195
Distribution only service	1		—		1		1		—		1
Total retail	216		28		244		176		20		196
Wholesale, transmission and other	14		—		14		12		—		12
Total Customer Revenue	230		28		258		188		20		208
Other revenue	—		—		—		1		—		1
Total revenue	$	230	$	28	$	258	$	189	$	20	$	209


	Six-Month Periods
	Ended June 30,
	2022						2021
	Electric		Natural Gas		Total		Electric		Natural Gas		Total
Customer Revenue:
Retail:
Residential	$	162	$	51	$	213	$	138	$	38	$	176
Commercial	151		21		172		117		15		132
Industrial	102		7		109		81		5		86
Other	3		—		3		3		—		3
Total fully bundled	418		79		497		339		58		397
Distribution only service	3		—		3		2		—		2
Total retail	421		79		500		341		58		399
Wholesale, transmission and other	35		—		35		28		—		28
Total Customer Revenue	456		79		535		369		58		427
Other revenue	1		1		2		1		1		2
Total revenue	$	457	$	80	$	537	$	370	$	59	$	429

144

(11) Segment Information

Sierra Pacific has identified two reportable operating segments: regulated electric and regulated natural gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated natural gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting natural gas owned by others through its distribution system. Pricing for regulated electric and regulated natural gas sales are established separately by the PUCN; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance.

The following tables provide information on a reportable segment basis (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	230	$	189	$	457	$	370
Regulated natural gas	28		20		80		59
Total operating revenue	$	258	$	209	$	537	$	429





















Operating income:
Regulated electric	$	19	$	21	$	49	$	52
Regulated natural gas	4		4		12		12
Total operating income	23		25		61		64
Interest expense	(14)		(13)		(27)		(27)
Allowance for borrowed funds	—		1		1		1
Allowance for equity funds	2		2		4		3
Interest and dividend income	4		1		7		3
Other, net	—		2		2		6
Income before income tax expense	$	15	$	18	$	48	$	50










	As of
		June 30,		December 31,
		2022		2021
Assets:
Regulated electric		$	3,995	$	3,829
Regulated natural gas		385		365
Other(1)		35		29
Total assets		$	4,415	$	4,223

(1) Consists principally of cash and cash equivalents not included in either the regulated electric or regulated natural gas segments.

145

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

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

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

Net income for the second quarter of 2022 was $13 million, a decrease of $4 million, or 24%, compared to 2021 primarily due to $6 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses, $2 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, and higher income tax expense, partially offset by $4 million of higher electric utility margin and higher interest and dividend income, mainly from carrying charges on regulatory balances. Electric utility margin increased primarily due to higher regulatory-related revenue deferrals and an increase in the average number of customers, partially offset by the unfavorable impact of weather, unfavorable price impacts from changes in sales mix and unfavorable changes in customer usage patterns. Energy generated decreased 33% for the second quarter of 2022 compared to 2021 primarily due to lower natural gas- and coal-fueled generation. Wholesale electricity sales volumes decreased 9% and purchased electricity volumes increased 38%.

Net income for the first six months of 2022 was $41 million, a decrease of $4 million, or 9%, compared to 2021 primarily due to $11 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses and higher earnings sharing, $4 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, and higher income tax expense, partially offset by $9 million of higher electric utility margin, $4 million of higher interest and dividend income, mainly from carrying charges on regulatory balances, and higher allowance for equity funds, mainly due to higher construction work-in-progress. Electric utility margin increased primarily due to higher transmission and wholesale revenue, higher regulatory-related revenue deferrals and an increase in the average number of customers, partially offset by the unfavorable impact of weather, unfavorable price impacts from changes in sales mix and unfavorable changes in customer usage patterns. Energy generated decreased 18% for the first six months of 2022 compared to 2021 primarily due to lower natural gas-fueled generation, partially offset by higher coal-fueled generation. Wholesale electricity sales volumes increased 35% and purchased electricity volumes increased 4%.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, electric utility margin and natural gas utility margin, to help evaluate results of operations. Electric utility margin is calculated as electric operating revenue less cost of fuel and energy while natural gas utility margin is calculated as natural gas operating revenue less cost of natural gas purchased for resale, which are captions presented on the Consolidated Statements of Operations.

Sierra Pacific's cost of fuel and energy and cost of natural gas purchased for resale are generally recovered from its customers through regulatory recovery mechanisms and as a result, changes in Sierra Pacific's expenses result in comparable changes to revenue. As such, management believes electric utility margin and natural gas utility margin more appropriately and concisely explain profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of electric utility margin and natural gas utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.

146

Electric utility margin and natural gas utility margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income which is the most directly comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Electric utility margin:
Operating revenue	$	230	$	189	$	41	22	%	$	457	$	370	$	87	24	%
Cost of fuel and energy	129		93		36		39		253		175		78		45
Electric utility margin	101		96		5		5	%	204		195		9		5	%

Natural gas utility margin:
Operating revenue	28		20		8		40	%	80		59		21		36	%
Natural gas purchased for resale	16		8		8		100		50		29		21		72
Natural gas utility margin	12		12		—		—	%	30		30		—		—	%

Utility margin	113		108		5		5	%	234		225		9		4	%

Operations and maintenance	47		41		6		15	%	88		77		11		14	%
Depreciation and amortization	37		36		1		3		73		72		1		1
Property and other taxes	6		6		—		—		12		12		—		—
Operating income	$	23	$	25	$	(2)	(8)	%	$	61	$	64	$	(3)	(5)	%

147

Electric Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	230	$	189	$	41	22	%	$	457	$	370	$	87	24	%
Cost of fuel and energy	129		93		36		39		253		175		78		45
Utility margin	$	101	$	96	$	5	5	%	$	204	$	195	$	9	5	%

Sales (GWhs):
Residential	573		626		(53)		(8)	%	1,236		1,297		(61)		(5)	%
Commercial	778		788		(10)		(1)		1,478		1,465		13		1
Industrial	721		900		(179)		(20)		1,476		1,797		(321)		(18)
Other	3		3		—		—		7		7		—		—
Total fully bundled(1)	2,075		2,317		(242)		(10)		4,197		4,566		(369)		(8)
Distribution only service	752		420		332		79		1,337		817		520		64
Total retail	2,827		2,737		90		3		5,534		5,383		151		3
Wholesale	114		125		(11)		(9)		405		300		105		35
Total GWhs sold	2,941		2,862		79		3	%	5,939		5,683		256		5	%

Average number of retail customers (in thousands)	370		365		5		1	%	370		364		6		2	%





Average revenue per MWh:
Retail - fully bundled(1)	$	103.25	$	75.42	$	27.83	37	%	$	99.79	$	74.31	$	25.48	34	%

Wholesale	$	65.84	$	52.18	$	13.66	26	%	$	55.28	$	56.84	$	(1.56)	(3)	%

Heating degree days	661		498		163		33	%	2,698		2,696		2		—	%
Cooling degree days	214		369		(155)		(42)	%	214		369		(155)		(42)	%

Sources of energy (GWhs)(2):
Natural gas	707		1,133		(426)		(38)	%	1,697		2,215		(518)		(23)	%
Coal	352		436		(84)		(19)		505		465		40		9
Renewables(3)	8		13		(5)		(38)		13		19		(6)		(32)
Total energy generated	1,067		1,582		(515)		(33)		2,215		2,699		(484)		(18)
Energy purchased	1,590		1,149		441		38		2,623		2,522		101		4
Total	2,657		2,731		(74)		(3)	%	4,838		5,221		(383)		(7)	%

Average cost of energy per MWh(4):
Energy generated	$	47.59	$	23.88	$	23.71	99	%	$	53.95	$	24.44	$	29.51	*
Energy purchased	$	49.73	$	48.21	$	1.52	3	%	$	51.09	$	43.16	$	7.93	18	%

* Not meaningful

(1) Fully bundled includes sales to customers for combined energy, transmission and distribution services.

(2) GWh amounts are net of energy used by the related generating facilities.

(3) Includes the Fort Churchill Solar Array which was under lease by Sierra Pacific until it was acquired in December 2021.

(4) The average cost of energy per MWh includes only the cost of fuel associated with the generating facilities, purchased power and deferrals.

148

Natural Gas Utility Margin

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


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	28	$	20	$	8	40	%	$	80	$	59	$	21	36	%
Natural gas purchased for resale	16		8		8		*		50		29		21		72
Utility margin	$	12	$	12	$	—	—	%	$	30	$	30	$	—	—	%

Sold (000's Dths):
Residential	1,797		1,450		347		24	%	6,349		6,108		241		4	%
Commercial	751		775		(24)		(3)		3,263		3,079		184		6
Industrial	402		395		7		2		1,055		1,140		(85)		(7)
Total retail	2,950		2,620		330		13	%	10,667		10,327		340		3	%

Average number of retail customers (in thousands)	179		177		2		1	%	179		176		3		2	%

Average revenue per retail Dth sold	$	9.47	$	7.62	$	1.85	24	%	$	7.46	$	5.69	$	1.77	31	%

Heating degree days	661		498		163		33	%	2,698		2,696		2		—	%

Average cost of natural gas per retail Dth sold	$	5.48	$	3.21	$	2.27	71	%	$	4.67	$	2.86	$	1.81	63	%

* Not meaningful

Quarter Ended June 30, 2022 Compared to Quarter Ended June 30, 2021

Electric utility margin increased $5 million, or 5%, for the second quarter of 2022 compared to 2021 primarily due to:

•$5 million of higher ON Line temporary rider (offset in operations and maintenance expense) for the recovery of deferred costs for the ON Line lease due to the regulatory-directed reallocation of costs between Nevada Power and Sierra Pacific and

•$4 million of higher regulatory-related revenue deferrals.

The increase in utility margin was offset by:

•$3 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 3.3% primarily due to an increase in the average number of customers, offset by the unfavorable impact of weather and unfavorable changes in customer usage patterns and

•$1 million of lower energy efficiency programs rates (offset in operations and maintenance expense).

Operations and maintenance increased $6 million, or 15%, for the second quarter of 2022 compared to 2021 primarily due to higher regulatory-approved cost recovery for the ON Line lease of $5 million (offset in operating revenue) and higher plant operations and maintenance expenses, partially offset by lower energy efficiency program costs (offset in operating revenue).

Interest and dividend income increased $3 million for the second quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net is unfavorable $2 million, for the second quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies and higher pension costs.

149

Income tax expense increased $1 million for the second quarter of 2022 compared to 2021 primarily due to the effects of ratemaking, offset by lower pretax income. The effective tax rate was 13% in 2022 and 6% in 2021.

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Electric utility margin increased $9 million, or 5%, for the first six months of 2022 compared to 2021 primarily due to:

•$3 million of higher transmission and wholesale revenue;

•$3 million of higher regulatory-related revenue deferrals; and

•$2 million of higher energy efficiency implementation rates.

The increase in utility margin was offset by:

•$2 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 2.8% primarily due to an increase in the average number of customers, offset by the unfavorable impact of weather and unfavorable changes in customer usage patterns and

•$2 million of lower energy efficiency programs rates (offset in operations and maintenance expense).

Operations and maintenance increased $11 million, or 14%, for the first six months of 2022 compared to 2021 primarily due to higher regulatory-approved cost recovery for the ON Line lease of $5 million (offset in operating revenue), higher plant operations and maintenance expenses of $5 million and higher earnings sharing, partially offset by lower energy efficiency program costs (offset in operating revenue).

Interest and dividend income increased $4 million for the first six months of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net unfavorable $4 million, or 67%, for the first six months of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies and higher pension costs.

Income tax expense increased $2 million, or 40%, for the first six months of 2022 compared to 2021 primarily due to the effects of ratemaking, offset by lower pretax income. The effective tax rate was 15% in 2022 and 10% in 2021.

Liquidity and Capital Resources

As of June 30, 2022, Sierra Pacific's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	17
Credit facility	250




Total net liquidity	$	267
Credit facility:
Maturity date	2025

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021 were $108 million and $92 million, respectively. The change was primarily due to higher collections from customers, partially offset by higher payments related to fuel and energy costs and the timing of payments for operating costs.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021 were $(191) million and $(128) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

150

Financing Activities

Net cash flows from financing activities for the six-month periods ended June 30, 2022 and 2021 were $91 million and $25 million, respectively. The change was primarily due to contributions from NV Energy, Inc. and higher proceeds from the issuance of long-term debt, partially offset by higher long-term debt reacquired, higher repayments of short-term debt and higher dividends paid to NV Energy, Inc.

Long-Term Debt

Debt Authorizations

Sierra Pacific currently has financing authority from the PUCN consisting of the ability to: (1) establish debt issuances limited to a debt ceiling of $1.9 billion (excluding borrowings under Sierra Pacific's $250 million secured credit facility); and (2) maintain a revolving credit facility of up to $600 million.

Future Uses of Cash

Sierra Pacific has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the use of its secured revolving credit facility, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which Sierra Pacific has access to external financing depends on a variety of factors, including regulatory approvals, Sierra Pacific's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

Capital expenditure needs are reviewed regularly by management and may change significantly as a result of these reviews, which may consider, among other factors, changes in environmental and other rules and regulations; impacts to customers' rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; load projections; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital. Prudently incurred expenditures for compliance-related items such as pollution-control technologies, replacement generation and associated operating costs are generally incorporated into Sierra Pacific's regulated retail rates.

151

Historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022


Electric distribution	$	42	$	46	$	114
Electric transmission	31		45		104

Other	55		100		186
Total	$	128	$	191	$	404

Sierra Pacific received PUCN approval through its recent IRP filings for an increase in solar generation and electric transmission. Sierra Pacific has included estimates from its latest IRP filing in its forecast capital expenditures for 2022. These estimates may change as a result of the RFP process. Sierra Pacific's historical and forecast capital expenditures include the following:

•Electric distribution includes both growth projects and operating expenditures consisting of routine expenditures for distribution needed to serve existing and expected demand.

•Other includes both growth projects and operating expenditures consisting of turbine upgrades at the Tracy generating facility, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of June 30, 2022, there have been no material changes in cash requirements from the information provided in Item 7 of Sierra Pacific's Annual Report on Form 10-K for the year ended December 31, 2021, other than those disclosed in Note 4 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Regulatory Matters

Sierra Pacific is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding Sierra Pacific's current regulatory matters.

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Sierra Pacific's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. Sierra Pacific believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Sierra Pacific is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

152

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, derivatives, impairment of long-lived assets, income taxes and revenue recognition - unbilled revenue. For additional discussion of Sierra Pacific's critical accounting estimates, see Item 7 of Sierra Pacific's Annual Report on Form 10‑K for the year ended December 31, 2021. There have been no significant changes in Sierra Pacific's assumptions regarding critical accounting estimates since December 31, 2021.

153

Eastern Energy Gas Holdings, LLC and its subsidiaries

Consolidated Financial Section

154

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Eastern Energy Gas Holdings, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Eastern Energy Gas Holdings, LLC and subsidiaries ("Eastern Energy Gas") as of June 30, 2022, the related consolidated statements of operations, comprehensive income, and changes in equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Eastern Energy Gas as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

/s/ Deloitte & Touche LLP

Richmond, Virginia

August 5, 2022

155

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	106	$	22

Trade receivables, net	174		183
Receivables from affiliates	26		47

Notes receivable from affiliates	198		7

Inventories	127		122

Natural gas imbalances	194		100
Other current assets	126		140
Total current assets	951		621

Property, plant and equipment, net	10,131		10,200
Goodwill	1,286		1,286

Investments	419		412

Other assets	140		129

Total assets	$	12,927	$	12,648

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

156

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


	As of
	June 30, 2022		December 31, 2021
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	45	$	79
Accounts payable to affiliates	20		38
Accrued interest	14		19
Accrued property, income and other taxes	78		89


Regulatory liabilities	49		40

Current portion of long-term debt	250		—
Other current liabilities	187		100
Total current liabilities	643		365

Long-term debt	3,636		3,906


Regulatory liabilities	640		645

Other long-term liabilities	291		238
Total liabilities	5,210		5,154

Commitments and contingencies (Note 8)

Equity:
Member's equity:

Membership interests	3,733		3,501


Accumulated other comprehensive loss, net	(39)		(43)
Total member's equity	3,694		3,458
Noncontrolling interests	4,023		4,036
Total equity	7,717		7,494

Total liabilities and equity	$	12,927	$	12,648

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

157

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021




Operating revenue	$	504	$	437	$	986	$	923

Operating expenses:

Excess gas	(21)		(10)		(22)		(10)
Operations and maintenance	124		113		242		237
Depreciation and amortization	80		81		165		161
Property and other taxes	37		38		66		77

Total operating expenses	220		222		451		465

Operating income	284		215		535		458

Other income (expense):
Interest expense	(36)		(42)		(72)		(86)

Allowance for equity funds	1		1		3		3


Other, net	—		1		(1)		2
Total other income (expense)	(35)		(40)		(70)		(81)

Income before income tax expense and equity income	249		175		465		377
Income tax expense	37		22		67		49
Equity income	9		7		28		23


Net income	221		160		426		351
Net income attributable to noncontrolling interests	118		100		229		202
Net income attributable to Eastern Energy Gas	$	103	$	60	$	197	$	149

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

158

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Net income	$	221	$	160	$	426	$	351

Other comprehensive (loss) income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $—, $—, $— and $—	—		2		1		4


Unrealized (losses) gains on cash flow hedges, net of tax of $—, $—, $1 and $3	(1)		3		3		13
Total other comprehensive (loss) income, net of tax	(1)		5		4		17

Comprehensive income	220		165		430		368
Comprehensive income attributable to noncontrolling interests	118		100		229		206
Comprehensive income attributable to Eastern Energy Gas	$	102	$	65	$	201	$	162

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

159

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)


			Accumulated
			Other
	Membership		Comprehensive		Noncontrolling		Total
	Interests		Loss, Net		Interests		Equity

Balance, March 31, 2021	$	3,035	$	(45)	$	4,088	$	7,078
Net income	60		—		100		160
Other comprehensive income	—		5		—		5
Contributions	271		—		—		271
Distributions	—		—		(116)		(116)
Balance, June 30, 2021	$	3,366	$	(40)	$	4,072	$	7,398

Balance, December 31, 2020	$	2,957	$	(53)	$	4,091	$	6,995
Net income	149		—		202		351
Other comprehensive income	—		13		4		17

Contributions	282		—		—		282
Distributions	(22)		—		(225)		(247)





Balance, June 30, 2021	$	3,366	$	(40)	$	4,072	$	7,398

Balance, March 31, 2022	$	3,595	$	(38)	$	4,033	$	7,590
Net income	103		—		118		221
Other comprehensive loss	—		(1)		—		(1)
Contributions	68		—		—		68
Distributions	(33)		—		(128)		(161)
Balance, June 30, 2022	$	3,733	$	(39)	$	4,023	$	7,717

Balance, December 31, 2021	$	3,501	$	(43)	$	4,036	$	7,494
Net income	197		—		229		426
Other comprehensive income	—		4		—		4
Contributions	68		—		—		68
Distributions	(33)		—		(242)		(275)




Balance, June 30, 2022	$	3,733	$	(39)	$	4,023	$	7,717

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

160

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six-Month Periods
	Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	426	$	351
Adjustments to reconcile net income to net cash flows from operating activities:

Losses on other items, net	2		3
Depreciation and amortization	165		161
Allowance for equity funds	(3)		(3)
Equity income, net of distributions	(5)		(3)
Changes in regulatory assets and liabilities	(2)		1
Deferred income taxes	52		118
Other, net	5		(9)
Changes in other operating assets and liabilities:
Trade receivables and other assets	4		65

Derivative collateral, net	(3)		(1)

Accrued property, income and other taxes	(3)		(63)

Accounts payable and other liabilities	43		(39)
Net cash flows from operating activities	681		581

Cash flows from investing activities:
Capital expenditures	(151)		(150)


Repayment of notes by affiliates	15		268
Notes to affiliates	(204)		(158)

Other, net	(7)		(12)
Net cash flows from investing activities	(347)		(52)

Cash flows from financing activities:

Repayments of long-term debt	—		(500)

Repayment of notes payable, net	—		(9)


Proceeds from equity contributions	—		256
Distributions	(242)		(225)

Other, net	—		(2)
Net cash flows from financing activities	(242)		(480)



Net change in cash and cash equivalents and restricted cash and cash equivalents	92		49
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	39		48
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	131	$	97

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

161

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

Eastern Energy Gas Holdings, LLC is a holding company, and together with its subsidiaries ("Eastern Energy Gas") conducts business activities consisting of Federal Energy Regulatory Commission ("FERC")-regulated interstate natural gas transportation pipeline and underground storage operations in the eastern region of the U.S. and operates Cove Point LNG, LP ("Cove Point"), a liquefied natural gas ("LNG") export, import and storage facility. Eastern Energy Gas owns 100% of the general partner interest and 25% of the limited partnership interest in Cove Point. In addition, Eastern Energy Gas owns a 50% noncontrolling interest in Iroquois Gas Transmission System, L.P. ("Iroquois"), a 416-mile FERC-regulated interstate natural gas transportation pipeline. Eastern Energy Gas is an indirect wholly owned subsidiary of Berkshire Hathaway Energy Company ("BHE"). BHE is a holding company based in Des Moines, Iowa that owns subsidiaries principally engaged in the energy industry. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Eastern Energy Gas' assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2022.

162

(2) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):


		As of
		June 30,		December 31,
	Depreciable Life	2022		2021
Utility Plant:

Interstate natural gas pipeline assets	21 - 44 years	$	8,728	$	8,675
Intangible plant	5 - 10 years	106		110
Utility plant in-service		8,834		8,785
Accumulated depreciation and amortization		(2,962)		(2,901)
Utility plant in-service, net		5,872		5,884

Nonutility Plant:

LNG facility	40 years	4,484		4,475
Intangible plant	14 years	25		25
Nonutility plant in-service		4,509		4,500
Accumulated depreciation and amortization		(484)		(423)
Nonutility plant in-service, net		4,025		4,077

Plant, net		9,897		9,961
Construction work-in-progress		234		239
Property, plant and equipment, net		$	10,131	$	10,200

Construction work-in-progress includes $200 million and $209 million as of June 30, 2022 and December 31, 2021, respectively, related to the construction of utility plant.

(3) Regulatory Matters

In September 2021, Eastern Gas Transmission and Storage, Inc. ("EGTS") filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective November 1, 2021. EGTS' previous general rate case was settled in 1998. EGTS proposed an annual cost-of-service of approximately $1.1 billion, and requested increases in various rates, including general system storage rates by 85% and general system transportation rates by 60%. In October 2021, the FERC issued an order that accepted the November 1, 2021 effective date for certain changes in rates, while suspending the other changes for five months following the proposed effective date, until April 1, 2022, subject to refund and the outcome of hearing procedures. In June 2022, the parties reached an agreement in principle and the litigation procedural schedule was ordered held in abeyance for 90 days to enable the parties to finalize a settlement. The settlement is expected to be filed by September 30, 2022. As of June 30, 2022, EGTS' provision for rate refund for April 2022 through June 2022 totaled $35 million and was included in other current liabilities on the Consolidated Balance Sheet.

163

In July 2017, the FERC audit staff communicated to EGTS that it had substantially completed an audit of EGTS' compliance with the accounting and reporting requirements of the FERC's Uniform System of Accounts and provided a description of matters and preliminary recommendations. In November 2017, the FERC audit staff issued its audit report. In December 2017, EGTS provided its response to the audit report. EGTS requested FERC review of the contested findings and submitted its plan for compliance with the uncontested portions of the report. EGTS reached resolution of certain matters with the FERC in the fourth quarter of 2018. EGTS recognized a charge for a disallowance of plant, originally established beginning in 2012, for the resolution of one matter with the FERC. In December 2020, the FERC issued a final ruling on the remaining matter, which resulted in a $43 million ($31 million after-tax) estimated charge for disallowance of capitalized allowance for funds used during construction. As a condition of the December 2020 ruling, EGTS filed its proposed accounting entries and supporting documentation with the FERC during the second quarter of 2021. During the finalization of these entries, EGTS refined the estimated charge for disallowance of capitalized allowance for funds used during construction, which resulted in a reduction to the estimated charge of $11 million ($8 million after-tax) that was recorded in operations and maintenance expense in its Consolidated Statements of Operations in the second quarter of 2021. In September 2021, the FERC approved EGTS' accounting entries and supporting documentation.

(4) Investments and Restricted Cash and Cash Equivalents

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


	As of
	June 30,		December 31,
	2022		2021
Investments:
Investment funds	$	13	$	13


Equity method investments:
Iroquois	406		399


Total investments	419		412

Restricted cash and cash equivalents:
Customer deposits	25		17
Total restricted cash and cash equivalents	25		17

Total investments and restricted cash and cash equivalents	$	444	$	429

Reflected as:
Current assets	$	25	$	17
Noncurrent assets	419		412
Total investments and restricted cash and cash equivalents	$	444	$	429

Equity Method Investments

Eastern Energy Gas, through a subsidiary, owns 50% of Iroquois, which owns and operates an interstate natural gas pipeline located in the states of New York and Connecticut.

As of both June 30, 2022 and December 31, 2021, the carrying amount of Eastern Energy Gas' investments exceeded its share of underlying equity in net assets by $130 million. The difference reflects equity method goodwill and is not being amortized. Eastern Energy Gas received distributions from its investments of $23 million and $20 million for the six-month periods ended June 30, 2022 and 2021, respectively.

164

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of customer deposits as allowed under the FERC gas tariffs. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):


	As of
	June 30,		December 31,
	2022		2021

Cash and cash equivalents	$	106	$	22
Restricted cash and cash equivalents included in other current assets	25		17
Total cash and cash equivalents and restricted cash and cash equivalents	$	131	$	39

(5) Income Taxes

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	3		2		4		3



Equity interest	1		1		1		1
Effects of ratemaking	—		(1)		(2)		(1)





Noncontrolling interest	(10)		(12)		(10)		(11)

Other, net	—		2		—		—
Effective income tax rate	15	%	13	%	14	%	13	%

For the period ended June 30, 2022, Eastern Energy Gas' reconciliation of the federal statutory income tax rate to the effective income tax rate is driven primarily by an absence of tax on income attributable to Cove Point's 75% noncontrolling interest.

(6) Employee Benefit Plans

Eastern Energy Gas is a participant in benefit plans sponsored by MidAmerican Energy Company ("MidAmerican Energy"), an affiliate. The MidAmerican Energy Company Retirement Plan includes a qualified pension plan that provides pension benefits for eligible employees. The MidAmerican Energy Company Welfare Benefit Plan provides certain postretirement health care and life insurance benefits for eligible retirees on behalf of Eastern Energy Gas. Eastern Energy Gas contributed $6 million to the MidAmerican Energy Company Retirement Plan and $1 million to the MidAmerican Energy Company Welfare Benefit Plan for the six-month period ended June 30, 2022. Amounts attributable to Eastern Energy Gas were allocated from MidAmerican Energy in accordance with the intercompany administrative service agreement. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net. As of both June 30, 2022 and December 31, 2021, Eastern Energy Gas' amount due to MidAmerican Energy associated with these plans and reflected in other long-term liabilities on the Consolidated Balance Sheets was $95 million.

165

(7) Fair Value Measurements

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

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

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

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

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 June 30, 2022:
Assets:


Money market mutual funds	$	66	$	—	$	—	$	66
Equity securities:
Investment funds	13		—		—		13
	$	79	$	—	$	—	$	79

Liabilities:
Commodity derivatives	$	—	$	(1)	$	—	$	(1)
Foreign currency exchange rate derivatives	—		(19)		—		(19)

	$	—	$	(20)	$	—	$	(20)

As of December 31, 2021:
Assets:

Foreign currency exchange rate derivatives	$	—	$	3	$	—	$	3
Equity securities:
Investment funds	13		—		—		13
	$	13	$	3	$	—	$	16

Liabilities:

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

	$	—	$	(3)	$	—	$	(3)

Eastern Energy Gas' investments in money market mutual funds and investment funds are stated at fair value. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value.

166

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 (in millions):


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	3,886	$	3,656	$	3,906	$	4,266

(8) Commitments and Contingencies

Legal Matters

Eastern Energy Gas is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. Eastern Energy Gas does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Environmental Laws and Regulations

Eastern Energy Gas is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Eastern Energy Gas' current and future operations. Eastern Energy Gas believes it is in material compliance with all applicable laws and regulations.

167

(9) Revenue from Contracts with Customers

The following table summarizes Eastern Energy Gas' revenue from contracts with customers ("Customer Revenue") by regulated and nonregulated, with further disaggregation of regulated by line of business (in millions):


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Customer Revenue:
Regulated:
Gas transportation and storage	$	286	$	246	$	571	$	525
Wholesale	—		—		—		17

Total regulated	286		246		571		542




Nonregulated	216		190		419		380
Total Customer Revenue	502		436		990		922
Other revenue(1)	2		1		(4)		1
Total operating revenue	$	504	$	437	$	986	$	923

(1)Other revenue consists primarily of revenue recognized in accordance with Accounting Standards Codification 815, "Derivative and Hedging" and includes unrealized gains and losses for derivatives not designated as hedges related to natural gas sales contracts.

Remaining Performance Obligations

The following table summarizes Eastern Energy Gas' revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of June 30, 2022 (in millions):


	Performance obligations expected to be satisfied
	Less than 12 months		More than 12 months		Total
Eastern Energy Gas	$	2,228	$	16,609	$	18,837

(10) Components of Accumulated Other Comprehensive Loss, Net

The following table shows the change in accumulated other comprehensive loss by each component of other comprehensive income (loss), net of applicable income tax (in millions):


	Unrecognized						Accumulated
	Amounts On		Unrealized				Other
	Retirement		Losses on Cash		Noncontrolling		Comprehensive
	Benefits		Flow Hedges		Interests		Loss, Net
Balance, December 31, 2020	$	(12)	$	(51)	$	10	$	(53)
Other comprehensive income (loss)	4		13		(4)		13
Balance, June 30, 2021	$	(8)	$	(38)	$	6	$	(40)

Balance, December 31, 2021	$	(6)	$	(42)	$	5	$	(43)
Other comprehensive income	1		3		—		4
Balance, June 30, 2022	$	(5)	$	(39)	$	5	$	(39)

168

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Eastern Energy Gas during the periods included herein. This discussion should be read in conjunction with Eastern Energy Gas' historical Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Eastern Energy Gas' actual results in the future could differ significantly from the historical results.

Results of Operations for the Second Quarter and First Six Months of 2022 and 2021

Overview

Net income attributable to Eastern Energy Gas for the second quarter of 2022 was $103 million, an increase of $43 million compared to 2021. Net income increased primarily due to higher margins from regulated gas transportation and storage operations of $52 million, partially offset by an increase in income tax expense of $15 million primarily due to higher pre-tax income.

Net income attributable to Eastern Energy Gas for the first six months of 2022 was $197 million, an increase of $48 million compared to 2021. Net income increased primarily due to higher margins from regulated gas transportation and storage operations of $37 million, lower interest expense of $13 million primarily due to the repayment of long-term debt in the second quarter of 2021 and lower than estimated 2021 tax assessments of $11 million, partially offset by an increase in income tax expense of $18 million primarily due to higher pre-tax income.

Quarter Ended June 30, 2022 Compared to Quarter Ended June 30, 2021

Operating revenue increased $67 million, or 15%, for the second quarter of 2022 compared to 2021, primarily due to an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, an increase in Cove Point liquefied natural gas variable revenue of $25 million, an increase in variable revenue related to park and loan activity of $6 million and a $4 million increase from the West Loop transmission pipeline being placed into service in the third quarter of 2021.

Excess gas increased $11 million for the second quarter of 2022 compared to 2021, primarily due to favorable valuations of system gas of $27 million, partially offset by a decrease in retained volumes of $16 million.

Operations and maintenance increased $11 million, or 10%, for the second quarter of 2022 compared to 2021, primarily due to a 2021 benefit from the finalization of entries for the disallowance of capitalized AFUDC of $11 million and an increase in post-retirement benefit related costs of $6 million, partially offset by bank and legal fees recorded in 2021 related to Eastern Energy Gas' debt exchange of $4 million.

Depreciation and amortization decreased $1 million, or 1%, for the second quarter of 2022 compared to 2021, primarily due to a decrease due to an agreement in principle for EGTS' general rate case of $6 million, partially offset by higher plant placed in-service of $5 million.

Interest expense decreased $6 million, or 14%, for the second quarter of 2022 compared to 2021, primarily due to the repayment of $500 million of long-term debt in the second quarter of 2021.

Income tax expense increased $15 million, or 68%, for the second quarter of 2022 compared to 2021, primarily due to higher pre-tax income. The effective tax rate was 15% for the second quarter of 2022 and 13% for the second quarter of 2021.

Net income attributable to noncontrolling interests increased $18 million, or 18%, for the second quarter of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue.

169

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Operating revenue increased $63 million, or 7%, for the first six months of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue of $38 million, an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, an increase in variable revenue related to park and loan activity of $11 million and a $7 million increase from the West Loop transmission pipeline being placed into service in the third quarter of 2021, partially offset by a decrease in regulated gas sales of $17 million for operational and system balancing purposes due to decreased volumes.

Excess gas increased $12 million for the first six months of 2022 compared to 2021, primarily due to a decrease in volumes sold of $14 million and favorable valuations of system gas of $18 million, partially offset by an unfavorable change to volumes of $20 million.

Operations and maintenance increased $5 million, or 2%, for the first six months of 2022 compared to 2021, primarily due to a 2021 benefit from the finalization of entries for the disallowance of capitalized AFUDC of $11 million, partially offset by bank and legal fees recorded in 2021 related to Eastern Energy Gas' debt exchange of $4 million.

Depreciation and amortization increased $4 million, or 2%, for the first six months of 2022 compared to 2021, primarily due to higher plant placed in-service of $10 million, partially offset by a decrease due to an agreement in principle for EGTS' general rate case of $6 million.

Property and other taxes decreased $11 million, or 14%, for the first six months of 2022 compared to 2021, primarily due to lower than estimated 2021 tax assessments.

Interest expense decreased $14 million, or 16%, for the first six months of 2022 compared to 2021, primarily due to the repayment of $500 million of long-term debt in the second quarter of 2021.

Income tax expense increased $18 million, or 37%, for the first six months of 2022 compared to 2021, primarily due to higher pre-tax income. The effective tax rate was 14% for the first six months of 2022 and 13% for the first six months of 2021.

Net income attributable to noncontrolling interests increased $27 million, or 13%, for the first six months of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue.

Liquidity and Capital Resources

As of June 30, 2022, Eastern Energy Gas' total net liquidity was $506 million as follows (in millions):


Cash and cash equivalents	$	106

Intercompany revolving credit agreement	400





Total net liquidity	$	506

Intercompany revolving credit agreement:
Maturity date	2022

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2022 and 2021 were $681 million and $581 million, respectively. The change is primarily due to the timing of income tax payments, the impacts from the proposed rates in effect April 1, 2022 for the EGTS general rate case and other working capital adjustments.

The timing of Eastern Energy Gas' income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods elected and assumptions for each payment date.

170

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2022 and 2021 were $(347) million and $(52) million, respectively. The increase is primarily due to a decrease in repayments of loans by affiliates of $253 million and an increase in loans to its parent under an intercompany revolving credit agreement of $46 million.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2022 were $(242) million and consisted of distributions to noncontrolling interests from Cove Point.

Net cash flows from financing activities for the six-month period ended June 30, 2021 were $(480) million. Sources of cash totaled $256 million and consisted of proceeds from equity contributions, that primarily included a contribution from its indirect parent, BHE, to Eastern Energy Gas to assist in the repayment of $500 million of debt. Uses of cash totaled $736 million and consisted mainly of repayments of long-term debt of $500 million, distributions to noncontrolling interests from Cove Point of $225 million and repayment of notes to affiliates of $9 million.

Future Uses of Cash

Eastern Energy Gas has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, intercompany revolving credit agreements, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, investments, debt retirements and other capital requirements. The availability and terms under which Eastern Energy Gas and each subsidiary has access to external financing depends on a variety of factors, including regulatory approvals, Eastern Energy Gas' credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the natural gas transportation pipeline and storage and LNG export, import and storage industries.

Capital Expenditures

Eastern Energy Gas' historical and forecasted capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):


	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2021		2022		2022

Natural gas transmission and storage	$	11	$	23	$	51
Other	139		128		314
Total	$	150	$	151	$	365

Eastern Energy Gas' natural gas transmission and storage capital expenditures primarily include growth capital expenditures related to planned regulated projects. Eastern Energy Gas' other capital expenditures consist primarily of non-regulated and routine capital expenditures for natural gas transmission, storage and liquefied natural gas terminalling infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of June 30, 2022, there have been no material changes in cash requirements from the information provided in Item 7 of Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021, other than natural gas supply and transportation cash requirements increasing $87 million, primarily due to rate increases for pipeline transportation and storage purchase obligations as a result of a recent rate case.

171

Regulatory Matters

Eastern Energy Gas is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding Eastern Energy Gas' current regulatory matters.

Environmental Laws and Regulations

Eastern Energy Gas is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Eastern Energy Gas' current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. Eastern Energy Gas believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Eastern Energy Gas is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, impairment of goodwill and long-lived assets and income taxes. For additional discussion of Eastern Energy Gas' critical accounting estimates, see Item 7 of Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in Eastern Energy Gas' assumptions regarding critical accounting estimates since December 31, 2021.

172

Item 3.Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting the Registrants, see Item 7A of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2021. Each Registrant's exposure to market risk and its management of such risk has not changed materially since December 31, 2021. Refer to Note 7 of the Notes to Consolidated Financial Statements of PacifiCorp, Note 7 of the Notes to Consolidated Financial Statements of Nevada Power and Note 7 of the Notes to Consolidated Financial Statements of Sierra Pacific in Part I, Item 1 of this Form 10-Q for disclosure of the respective Registrant's derivative positions as of June 30, 2022.

Item 4.Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, each of Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company, Sierra Pacific Power Company and Eastern Energy Gas Holdings, LLC carried out separate evaluations, under the supervision and with the participation of each such entity's management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based upon these evaluations, management of each such entity, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, concluded that the disclosure controls and procedures for such entity were effective to ensure that information required to be disclosed by such entity in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission's rules and forms, and is accumulated and communicated to its management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, as appropriate to allow timely decisions regarding required disclosure by it. Each such entity hereby states that there has been no change in its internal control over financial reporting during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

173

PART II

Item 1.Legal Proceedings

Berkshire Hathaway Energy and PacifiCorp

On September 30, 2020, a putative class action complaint against PacifiCorp was filed, captioned Jeanyne James et al. v. PacifiCorp et al., Case No. 20cv33885, Circuit Court, Multnomah County, Oregon. The complaint was filed by Oregon residents and businesses who seek to represent a class of all Oregon citizens and entities whose real or personal property was harmed beginning on September 7, 2020, by wildfires in Oregon allegedly caused by PacifiCorp. On November 3, 2021, the plaintiffs filed an amended complaint to limit the class to include Oregon citizens allegedly impacted by the Echo Mountain, South Obenchain, Two Four Two and Santiam Canyon (also known as Beachie Creek) fires, as well as to add claims for noneconomic damages. The amended complaint alleges that PacifiCorp's assets contributed to the Oregon wildfires occurring on or after September 7, 2020 and that PacifiCorp acted with gross negligence, among other things. The amended complaint seeks the following damages for the plaintiffs and the putative class: (i) noneconomic damages, including mental suffering, emotional distress, inconvenience and interference with normal and usual activities, in excess of $1 billion; (ii) damages for real and personal property and other economic losses of not less than $600 million; (iii) double the amount of property and economic damages; (iv) treble damages for specific costs associated with loss of timber, trees and shrubbery; (v) double the damages for the costs of litigation and reforestation; (vi) prejudgment interest; and (vii) reasonable attorney fees, investigation costs and expert witness fees. The plaintiffs demand a trial by jury and have reserved their right to further amend the complaint to allege claims for punitive damages. In May 2022, the Multnomah Circuit Court granted issue class certification and consolidated this case with others as described below. PacifiCorp requested an immediate appeal of the issue class certification before the Oregon Court of Appeals.

On August 20, 2021, a complaint against PacifiCorp was filed, captioned Shylo Salter et al. v. PacifiCorp, Case No. 21cv33595, Multnomah County, Oregon, in which two complaints, Case No. 21cv09339 and Case No. 21cv09520, previously filed in Circuit Court, Marion County, Oregon, were combined. The plaintiffs voluntarily dismissed the previously filed complaints in Marion County, Oregon. The refiled complaint was filed by Oregon residents and businesses who allege that they were injured by the Beachie Creek Fire, which the plaintiffs allege began on or around September 7, 2020, but which government reports indicate began on or around August 16, 2020. The complaint alleges that PacifiCorp's assets contributed to the Beachie Creek Fire and that PacifiCorp acted with gross negligence, among other things. The complaint seeks the following damages: (i) damages related to real and personal property in an amount determined by the jury to be fair and reasonable, estimated not to exceed $75 million; (ii) other economic losses in an amount determined by the jury to be fair and reasonable, but not to exceed $75 million; (iii) noneconomic damages in the amount determined by the jury to be fair and reasonable, but not to exceed $500 million; (iv) double the damages for economic and property damages under specified Oregon statutes; (v) alternatively, treble the damages under specified Oregon statutes; (vi) attorneys' fees and other costs; and (vii) pre- and post-judgment interest. The plaintiffs demand a trial by jury and have reserved their right to amend the complaint with an intent to add a claim for punitive damages. In May 2022, this case was consolidated with others as described below.

In May 2022, the Multnomah Circuit Court granted plaintiffs' motion to consolidate Shylo Salter et al. v. PacifiCorp, Case No. 21cv33595 (described above) and Amy Allen, et al. v. PacifiCorp, Case No. 20cv37430 ("Allen") into Jeanyne James et al. v. PacifiCorp et al., Case No. 20cv33885 (described above). Plaintiffs' motion to bifurcate issues for trial between class-wide liability and individual damages was also granted. The Allen case was filed by five individuals as amended in September 2021 claiming in excess of $32 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre- and post-judgment interest.

In June 2022, an amended complaint against PacifiCorp was filed, captioned Tim Goforth et al. v. PacifiCorp, Case No. 20cv37637, Douglas County, Oregon, in which a previously filed complaint associated with the Archie Creek Fire, Susan Creek Fire and Smith Springs Road Fire in Douglas County in September 2020 was amended to add punitive damages. The complaint alleges (i) PacifiCorp's conduct not only constituted common law negligence but gross negligence and contributed to or was the cause of ignition and spread of the aforementioned fires; (ii) PacifiCorp violated certain Oregon rules and regulations; and (iii) as an alternative to negligence, inverse condemnation. The complaint seeks the following damages: (i) economic and property damages of $11 million under a determination of negligence or inverse condemnation and subject to doubling under Oregon statute if applicable; (ii) doubling of those economic and property damages to $22 million under a determination of gross negligence; (iii) damages for injuries in excess of $47 million; (iv) punitive damages not to exceed 10 times the amount of non-economic damages awarded; (v) all costs of the lawsuit; (vi) pre- and post-judgment interest as allowed by law; and (vii) attorneys' fees and other costs.

174

Other individual lawsuits alleging similar claims have been filed in Oregon and California related to the 2020 Wildfires. Investigations into the causes and origins of those wildfires are ongoing. For more information regarding certain legal proceedings affecting Berkshire Hathaway Energy, refer to Note 8 of the Notes to Consolidated Financial Statements of Berkshire Hathaway Energy in Part I, Item 1 of this Form 10-Q, and PacifiCorp, refer to Note 9 of the Notes to Consolidated Financial Statements of PacifiCorp in Part I, Item 1 of this Form 10-Q.

PacifiCorp

On March 17, 2022, a complaint against PacifiCorp was filed, captioned Roseburg Resources Co et al. v. PacifiCorp, Case No. 22cv09346, Circuit Court, Douglas County, Oregon. The complaint was filed by nine businesses and public pension plans that own and/or operate timberlands or possess property in Douglas County who allege damages, losses and injuries associated with their timberlands as a result of the French Creek Fire, the Archie Creek Fire, the Susan Creek Fire and the Smith Springs Road Fire in Douglas County in September 2020. The complaint alleges (i) PacifiCorp's conduct constituted not only common law negligence but also gross negligence and that such conduct contributed to or caused the ignition and spread of the aforementioned fires; (ii) PacifiCorp violated certain Oregon rules and regulations; and (iii) as an alternative to negligence, inverse condemnation. The complaint seeks the following damages: (i) economic and property damages in excess of $175 million under a determination of negligence or inverse condemnation; (ii) doubling of those economic damages to in excess of $350 million under a determination of gross negligence pursuant to Oregon statutes; (iii) all costs of the lawsuit; (iv) prejudgment and post-judgment interest as allowed by law; and (v) attorneys' fees and other costs.

175

Item 1A.Risk Factors

There has been no material change to each Registrant's risk factors from those disclosed in Item 1A of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2021, except as disclosed below.

Potential terrorist activities and the impact of military or other actions, including sanctions, export controls and similar measures, could adversely affect each Registrant's financial results.

The ongoing threat of terrorism and the impact of military or other actions by nations or politically, ethnically or religiously motivated organizations regionally or globally may create increased political, economic, social and financial market instability, which could subject each Registrant's operations to increased risks. Additionally, the U.S. government has issued warnings that energy assets, specifically pipeline, nuclear generation, transmission and other electric utility infrastructure, are potential targets for terrorist attacks. Further, the potential or actual outbreak of war or other hostilities, such as Russia's invasion of Ukraine in February 2022 and the resulting economic sanctions on Russia and the sale of Russian natural gas and petroleum, as well as the existing and potential further responses from Russia or other countries to such sanctions and military actions, could adversely affect global and regional economies and financial markets. For instance, the current ban on imports of Russian oil, liquefied natural gas and coal to the U.S. could contribute to increases in prices for such commodities in the U.S. and elsewhere which could adversely affect each Registrant's business. Further, each Registrant's business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, including those administered and enforced by the U.S. Department of Treasury's Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant governmental authorities in the U.S., Canada, the United Kingdom and European Union, which include sanctions that could potentially restrict or prohibit each Registrant's relationships with certain suppliers and customers. Political, economic, social or financial market instability or damage to or interference with the operating assets of the Registrants, customers or suppliers, or continued increases in the price of natural gas and other petroleum commodities may result in business interruptions, lost revenue, higher costs, disruption in fuel supplies, lower energy consumption and unstable markets, particularly with respect to electricity and natural gas, and increased security, repair or other costs, any of which may materially adversely affect each Registrant in ways that cannot be predicted at this time. Any of these risks could materially affect its consolidated financial results. Furthermore, instability in the financial markets as a result of terrorism or war could also materially adversely affect each Registrant's ability to raise capital.

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

Not applicable.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Information regarding Berkshire Hathaway Energy's and PacifiCorp's mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 95 to this Form 10-Q.

Item 5.Other Information

Not applicable.

Item 6.Exhibits

The following is a list of exhibits filed as part of this Quarterly Report.

176


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY


4.1			Seventeenth Supplemental Indenture, dated as of April 21, 2022, by and between Berkshire Hathaway Energy Company and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 4.600% Senior Notes due 2053 (incorporated by reference to Exhibit 4.1 to the Berkshire Hathaway Energy Company Current Report on Form 8-K dated April 25, 2022).

4.2			Trust Deed, dated as of April 1, 2022, among Northern Powergrid (Northeast) plc and HSBC Corporate Trustee Company (UK) Limited, relating to the £350,000,000 in principal amount of the 3.250% Bonds due 2052 (incorporated by reference to Exhibit 4.2 to the Berkshire Hathaway Energy Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).

10.1			$3,500,000,000 Third Amended and Restated Credit Agreement, dated as of June 30, 2022, among Berkshire Hathaway Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, MUFG Bank, Ltd. as Administrative Agent and the LC Issuing Banks.

15.1			Awareness Letter of Independent Registered Public Accounting Firm.

31.1			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

PACIFICORP


15.2			Awareness Letter of Independent Registered Public Accounting Firm.

31.3			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.3			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.4			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

BERKSHIRE HATHAWAY ENERGY AND PACIFICORP


10.2			$1,200,000,000 Third Amended and Restated Credit Agreement , dated as of June 30, 202 2 , among PacifiCorp, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, JP Morgan Chase Bank, N.A. as Administrative Agent and the LC Issuing Banks.
95			Mine Safety Disclosures Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

MIDAMERICAN ENERGY


15.3			Awareness Letter of Independent Registered Public Accounting Firm.

31.5			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.6			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.5			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.6			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

177


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY AND MIDAMERICAN ENERGY


10.3			$1,500,000,000 Third Amended and Restated Credit Agreement, dated as of June 30, 2022, among MidAmerican Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Mizuho Bank, Ltd. as Administrative Agent and the LC Issuing Banks.

MIDAMERICAN FUNDING


31.7			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.8			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.7			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.8			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

NEVADA POWER


15.4			Awareness Letter of Independent Registered Public Accounting Firm.

31.9			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.10			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.9			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.10			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

BERKSHIRE HATHAWAY ENERGY AND NEVADA POWER


10.4			$4 0 0,000,000 Fifth Amended and Restated Credit Agreement, dated as of June 30, 2022, among Nevada Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent and the LC Issuing Banks.

SIERRA PACIFIC


10.5			$200,000,000 Demand Promissory Note, dated as of April 14, 2022, among Sierra Pacific Power Company, as the Maker, and NV Energy Inc., as the Holder (incorp orate d by reference to Exhibit 10.1 to the Sierra Pacific Power Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2 02 2).

31.11			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.12			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.11			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.12			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

178


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY AND SIERRA PACIFIC


4.3			Bond Purchase Agreement, dated as of May 31, 2022, by and among Sierra Pacific Power Company and the Purchasers, relating to the $250,000,000 in principal amount of the 4.71% General and Refunding Mortgage Bonds due 2052 (incorporated by reference to Exhibit 4.1 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

4.4			Third Supplemental Indenture, dated as of May 31, 2022, by and between Sierra Pacific Power Company and the Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

4.5			Officer's Certificate establishing the terms of Sierra Pacific Power Company's 4.71% General and Refunding Mortgage Bonds, Series W, due 2052 (incorporated by reference to Exhibit 4.3 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

10.6			$2 5 0,000,000 Fifth Amended and Restated Credit Agreement, dated as of June 30, 2022, among Sierra Pacific Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent and the LC Issuing Banks.

EASTERN ENERGY GAS


31.13			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.14			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.13			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.14			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

ALL REGISTRANTS


101			The following financial information from each respective Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, is formatted in iXBRL (Inline eXtensible Business Reporting Language) and included herein: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.

104			Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

179

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			BERKSHIRE HATHAWAY ENERGY COMPANY

Date: August 5, 2022			/s/ Calvin D. Haack
			Calvin D. Haack
			Senior Vice President and Chief Financial Officer
			(principal financial and accounting officer)

			PACIFICORP

Date: August 5, 2022			/s/ Nikki L. Kobliha
			Nikki L. Kobliha
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

			MIDAMERICAN FUNDING, LLC
			MIDAMERICAN ENERGY COMPANY

Date: August 5, 2022			/s/ Thomas B. Specketer
			Thomas B. Specketer
			Vice President and Controller
			of MidAmerican Funding, LLC and
			Vice President and Chief Financial Officer
			of MidAmerican Energy Company
			(principal financial and accounting officer)

			NEVADA POWER COMPANY

Date: August 5, 2022			/s/ Michael E. Cole
			Michael E. Cole
			Senior Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

			SIERRA PACIFIC POWER COMPANY

Date: August 5, 2022			/s/ Michael E. Cole
			Michael E. Cole
			Senior Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

			EASTERN ENERGY GAS HOLDINGS, LLC

Date: August 5, 2022			/s/ Scott C. Miller
			Scott C. Miller
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

180

EX-10.1 2 bhe63022ex101.htm $3,500,000,000 THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED JUNE 30, 2022 Document

EXHIBIT 10.1

Execution Version

U.S. $3,500,000,000

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of June 30, 2022

Among

BERKSHIRE HATHAWAY ENERGY COMPANY

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

MUFG BANK, LTD.

as Administrative Agent

and

THE LC ISSUING BANKS

PARTY HERETO FROM TIME TO TIME

as LC Issuing Banks


MUFG UNION BANK, N.A. J.P. MORGAN CHASE BANK, N.A. WELLS FARGO SECURITIES, LLC MIZUHO BANK, LTD.			CITIBANK, N.A. BARCLAYS BANK PLC U.S. BANK NATIONAL ASSOCIATION SUMITOMO MITSUI BANKING CORPORATION

Joint Lead Arrangers and Joint Bookrunners


JPMORGAN CHASE BANK, N.A. WELLS FARGO BANK, NATIONAL ASSOCIATION MIZUHO BANK, LTD. CITIBANK, N.A. BARCLAYS BANK PLC U.S. BANK NATIONAL ASSOCIATION SUMITOMO MITSUI BANKING CORPORATION ROYAL BANK OF CANADA THE BANK OF NOVA SCOTIA Syndication Agents			BANK OF MONTREAL TD BANK, N.A. PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA, N.A. Documentation Agents

TABLE OF CONTENTS

Page


ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			1
SECTION 1.01. Certain Defined Terms.			1
SECTION 1.02. Computation of Time Periods.			27
SECTION 1.03. Accounting Terms.			27
SECTION 1.04. Classification of Loans and Borrowings.			27
SECTION 1.05. Other Interpretive Provisions.			28
SECTION 1.06. Interest Rates; Benchmark Notification.			28
ARTICLE II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT			28
SECTION 2.01. The Revolving Loans.			28
SECTION 2.02. Making the Revolving Loans.			29
SECTION 2.03. [Reserved]			30
SECTION 2.04. Letters of Credit.			31
SECTION 2.05. Fees.			36
SECTION 2.06. Extension of the Termination Date.			37
SECTION 2.07. Increase of the Commitments.			38
SECTION 2.08. Termination or Reduction of the Commitments.			39
SECTION 2.09. Repayment of Loans.			39
SECTION 2.10. Evidence of Indebtedness.			39
SECTION 2.11. Interest on Loans.			40
SECTION 2.12. Interest Rate Determination.			40
SECTION 2.13. Conversion of Revolving Loans.			43
SECTION 2.14. Optional Prepayments of Loans.			44
SECTION 2.15. Increased Costs.			44
SECTION 2.16. Illegality.			45
SECTION 2.17. Payments and Computations.			46
SECTION 2.18. Taxes.			47
SECTION 2.19. Sharing of Payments, Etc.			51
SECTION 2.20. Mitigation Obligations; Replacement of Lenders.			51
SECTION 2.21. Defaulting Lenders.			52
SECTION 2.22. Cash Collateral.			55
ARTICLE III CONDITIONS PRECEDENT			56
SECTION 3.01. Conditions Precedent to Effectiveness.			56
SECTION 3.02. Conditions Precedent to each Extension of Credit.			57
ARTICLE IV REPRESENTATIONS AND WARRANTIES			57
SECTION 4.01. Representations and Warranties of the Borrower.			57


ARTICLE V COVENANTS OF THE BORROWER			60
SECTION 5.01. Affirmative Covenants.			60
SECTION 5.02. Negative Covenants.			63
SECTION 5.03. Financial Covenant.			66
ARTICLE VI EVENTS OF DEFAULT			66
SECTION 6.01. Events of Default.			66
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.			68
ARTICLE VII THE ADMINISTRATIVE AGENT			68
SECTION 7.01. Appointment and Authority.			68
SECTION 7.02. Rights as a Lender.			69
SECTION 7.03. Exculpatory Provisions.			69
SECTION 7.04. Reliance by Administrative Agent.			70
SECTION 7.05. Resignation of Administrative Agent.			70
SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.			71
SECTION 7.07. Indemnification.			72
SECTION 7.08. No Other Duties, etc.			72
SECTION 7.09. Erroneous Payments.			73
ARTICLE VIII MISCELLANEOUS			77
SECTION 8.01. Amendments, Etc.			77
SECTION 8.02. Notices, Etc.			77
SECTION 8.03. No Waiver; Remedies.			79
SECTION 8.04. Costs and Expenses; Indemnification.			80
SECTION 8.05. Right of Set-off.			82
SECTION 8.06. Binding Effect.			83
SECTION 8.07. Assignments and Participations.			83
SECTION 8.08. Confidentiality.			87
SECTION 8.09. Governing Law.			87
SECTION 8.10. Severability.			87
SECTION 8.11. Execution in Counterparts.			87
SECTION 8.12. Jurisdiction, Etc.			88
SECTION 8.13. Waiver of Jury Trial.			88
SECTION 8.14. USA Patriot Act.			89
SECTION 8.15. No Fiduciary Duty.			89
SECTION 8.16. Acknowledgement and Consent to Bail-In of Affected Financial Institutions.			89
SECTION 8.17. No Novation; Reaffirmation.			90
SECTION 8.18. Certain ERISA Matters.			90


EXHIBITS AND SCHEDULES
EXHIBIT A	---------------	Form of Notice of Borrowing
EXHIBIT B	---------------	Form of Request for Issuance
EXHIBIT C	---------------	Form of Assignment and Assumption
EXHIBIT F-1	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-2	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-3	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-4	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes
SCHEDULE I	---------------	List of Commitment Amounts and Lending Offices
SCHEDULE II	---------------	List of Fronting Commitments
SCHEDULE III	---------------	List of Material Subsidiaries
SCHEDULE IV	---------------	List of Certain Preferred Securities and Junior Subordinated Debentures
SCHEDULE V	---------------	Existing Letters of Credit

iii

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2022 (as further amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), among BERKSHIRE HATHAWAY ENERGY COMPANY, an Iowa corporation (the “Borrower”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “Initial Lenders”), MUFG Bank, Ltd. (“MUFG”), as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined) party hereto from time to time.

BACKGROUND

This Agreement amends and restates in its entirety the Second Amended and Restated Credit Agreement dated as of June 30, 2021, by and among the Borrower, MUFG Bank, Ltd., as administrative agent and the lenders party thereto from time to time (as amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”).

In consideration of the premises and of the mutual agreements herein contained and intending to be legally bound hereby, the parties hereto agree that the above-referenced existing credit agreement be and it hereby is amended and restated to read in full as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01 Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Adjusted Daily Simple SOFR” means an interest rate per annum equal to (a) the Daily Simple SOFR, plus (b) 0.10%; provided that if the Adjusted Daily Simple SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

“Adjusted Term SOFR” means, for any Interest Period, an interest rate per annum equal to (a) Term SOFR for such Interest Period, plus (b) 0.10%; provided that if Adjusted Term SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

“Administrative Agent” has the meaning specified in the first paragraph of this Agreement.

“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.

“Agent Fee Letter” means the letter agreement, dated May 3, 2021 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“Agent Parties” has the meaning specified in Section 8.02(d)(ii).

“Agent’s Account” means the account of the Administrative Agent designated from time to time in a written notice to the Lenders and the Borrower as the account to which the Lenders are to fund Borrowings and the Borrower is to make payments under this Agreement.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any Subsidiary of the Borrower or their respective activities from time to time concerning or relating to bribery or corruption, including, without limitation, (i) the United States Foreign Corrupt Practices Act of 1977, as amended from time to time, and the applicable regulations thereunder, and (ii) to the extent applicable, the United Kingdom’s Bribery Act 2010, as amended from time to time.

“Applicable Law” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of all Governmental Authorities, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity or admiralty) and arbitrators.

“Applicable Margin” means, with respect to any Base Rate Loan and any SOFR Rate Revolving Loan, at all times during which any Applicable Rating Level set forth below is in effect, the rate per annum (except as provided below) for such Loan set forth below next to such Applicable Rating Level:


Applicable Rating Level	Applicable Margin for SOFR Rate Revolving Loans	Applicable Margin for Base Rate Loans
1	0.750%	0.000%
2	0.875%	0.000%
3	1.000%	0.000%
4	1.125%	0.125%
5	1.375%	0.375%

provided, that the Applicable Margins set forth above shall be increased, for each Applicable Rating Level, upon the occurrence and during the continuance of any Event of Default by 2.00% per annum. Any change in the Applicable Margin resulting from a change in the Applicable Rating Level shall become effective upon the date of announcement of any change in the Moody’s Rating or the S&P Rating that results in such change in the Applicable Rating Level.

“Applicable Rating Level” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:


S&P Rating/Moody’s Rating			Applicable Rating Level
S&P Rating A+ or higher or Moody’s Rating A1 or higher			1
S&P Rating A or Moody’s Rating A2			2
S&P Rating A- or Moody’s Rating A3			3
S&P Rating BBB+ or Moody’s Rating Baa1			4
S&P Rating BBB or below or Moody’s Rating Baa2 or below or unrated			5

The Applicable Rating Level for any day shall be determined based upon the higher of the S&P Rating and the Moody’s Rating in effect on such day. If the S&P Rating and the Moody’s Rating are not the same (i.e., a “split rating”), the higher (better) of such ratings shall control, unless the ratings differ by more than one level, in which case the rating one level below the higher of the two ratings shall control.

“Approved Fund” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“Available Commitments” means, on any day, the aggregate unused Commitments, computed after giving effect to all Extensions of Credit made or to be made on such day, the application of proceeds therefrom and all prepayments and repayments of Revolving Loans made on such day.

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.12.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets (including the Federal Deposit Insurance Corporation or any other Governmental Authority acting in a similar capacity) appointed for it, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or a direct or indirect parent company of such Person by a Governmental Authority if and for so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

“Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:

(i)the rate of interest announced by the Administrative Agent from time to time as the Administrative Agent’s reference rate;

(ii)1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)Adjusted Term SOFR for a one-month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day), plus 1%

; provided, that in no event shall the Base Rate be less than 0%.

“Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“Benchmark” means, initially, with respect to any Term Benchmark Loan, Adjusted Term SOFR; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to Adjusted Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.12.

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

(1) Adjusted Daily Simple SOFR;

(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment;

If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

“Benchmark Replacement Date” means, with respect to any Benchmark, the earlier to occur of the following events with respect to such then-current Benchmark:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.12 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.12.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.

“Berkshire Hathaway” means Berkshire Hathaway Inc.

“BHE Shareholders” means the holders of the common stock of the Borrower.

“Borrower” has the meaning specified in the first paragraph of this Agreement.

“Borrowing” means a borrowing by the Borrower consisting of simultaneous Revolving Loans of the same Type, having the same Interest Period and ratably made or Converted on the same day by each of the Lenders pursuant to Section 2.02 or 2.13, as the case may be. All Revolving Loans to the Borrower of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.

“Borrowing Date” means the date of any Borrowing.

“Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City or Los Angeles; provided, that when used in connection with any Adjusted Term SOFR Loan, the term “Business Day” shall also exclude any day that is not also a U.S. Government Business Securities Day.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the LC Issuing Banks and the Lenders, as collateral for LC Outstandings and obligations of Lenders to fund participations in respect of LC Outstandings, cash or deposit account balances or, if the Administrative Agent and each applicable LC Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and each applicable LC Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives (whether or not having the force of law) thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives (whether or not having the force of law) promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” has the meaning specified in Section 6.01(h).

“Closing Date” means June 30, 2022.

“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

“Commitment” means, for each Lender, the obligation of such Lender to make Revolving Loans to the Borrower hereunder in an aggregate amount no greater than the amount set forth on Schedule I hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c), in each such case as such amount may be from time to time increased pursuant to Section 2.07 or reduced pursuant to Section 2.08.

“Commitment Fee Rate” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:


Applicable Rating Level			Commitment Fee Rate
1			0.060%
2			0.075%
3			0.100%
4			0.150%
5			0.200%

A change in the Commitment Fee Rate resulting from a change in the Applicable Rating Level shall become effective upon the date of public announcement of a change in the Moody’s Rating or the S&P Rating that results in a change in the Applicable Rating Level.

“Commitment Percentage” means, as to any Lender as of any date of determination, the percentage describing such Lender’s pro rata share of the Commitments set forth initially on Schedule I hereto or in the Register from time to time; provided that in the case of Section 2.21 when a Defaulting Lender shall exist, “Commitment Percentage” means the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Commitment Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

“Commitments” means the aggregate of each Lender’s Commitment hereunder.

“Communications” has the meaning specified in Section 8.02(d)(ii).

“Confidential Information” means information that the Borrower furnishes to the Administrative Agent, the Joint Lead Arrangers or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent, the Joint Lead Arrangers or such Lender from a source other than the Borrower that has no obligation to maintain the confidentiality of such information.

“Consolidated Assets” means, on any date of determination, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries most recently delivered to the Lenders pursuant to Section 5.01(h) as of such date of determination.

“Consolidated Capital” means the sum (without duplication) of (i) Consolidated Debt of the Borrower (without giving effect to the proviso in clause (i) of the definition of Consolidated Debt), (ii) consolidated equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and (iii) the total face or principal amount of the Preferred Securities.

“Consolidated Debt” of the Borrower means (i) the total principal amount of all Debt of the Borrower and its Consolidated Subsidiaries; provided that Guaranties of Debt and obligations in respect of the Preferred Securities (to the extent constituting Debt) shall not be included in such total principal amount, plus (ii) the total face or principal amount of the Subsidiary Preferred Securities.

“Consolidated Subsidiary” means, with respect to any Person at any time, any Subsidiary or other Person the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP.

“Convert,” “Conversion” and “Converted” each refers to a conversion of Revolving Loans of one Type into Revolving Loans of the other Type, or the selection of a new, or the renewal of the same, Interest Period for SOFR Rate Revolving Loans, pursuant to Section 2.12 or 2.13.

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

“Credit Party” means the Administrative Agent, any LC Issuing Bank or any Lender.

“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.

“Debt” of any Person means, at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, and (vi) all Guaranties. Solely for the purpose of calculating compliance with the covenant in Section 5.03, Debt shall not include Debt of the Borrower or its Consolidated Subsidiaries arising from the qualification of an arrangement as a lease due to that arrangement conveying the right to use or to control the use of property, plant or equipment under the application of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by PacifiCorp under the requirements of Topic 810 – Consolidation.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

“Declining Lender” has the meaning specified in Section 2.06(b).

“Default” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“Defaulting Lender” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans, (B) fund any portion of its participations in Letters of Credit or (C) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent, any LC Issuing Bank or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank and each Lender.

“Designated Lender” has the meaning specified in Section 2.07(a).

“Dollars” and the symbol “$” mean lawful currency of the United States of America.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.07(b)(iii)).

“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means, with respect to any Person, each trade or business (whether or not incorporated) that is considered to be a single employer with such entity within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code.

“ERISA Event” means (i) any “reportable event,” as defined in Section 4043 of ERISA with respect to a Pension Plan (other than an event as to which the PBGC has waived the requirement of Section 4043(a) of ERISA that it be notified of such event); (ii) the failure to make a required contribution to any Pension Plan that would result in the imposition of a lien or other encumbrance or the provision of security under Section 430 of the Internal Revenue Code or Section 303 or 4068 of ERISA, or there being or arising any “unpaid minimum required contribution” or “accumulated funding deficiency” (as defined or otherwise set forth in Section 4971 of the Internal Revenue Code or Part 3 of Subtitle B of Title I of ERISA), whether or not waived, or the filing of any request for or receipt of a minimum funding waiver under Section 412 of the Internal Revenue Code with respect to any Pension Plan or Multiemployer Plan, or a determination that any Pension Plan is, or is reasonably expected to be, in at-risk status under Title IV of ERISA; (iii) the filing of a notice of intent to terminate any Pension Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan, or the termination of any Pension Plan under Section 4041(c) of ERISA; (iv) the institution of proceedings, or the occurrence of an event or condition that would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA, for the termination of, or the appointment of a trustee to administer, any Pension Plan; (v) the complete or partial withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“Erroneous Payment” has the meaning assigned to it in Section 7.09(a).

“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 7.09(d).

“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 7.09(d).

“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 7.09(d).

“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 7.09(d).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Events of Default” has the meaning specified in Section 6.01.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.20(b)) or (B) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 2.18, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.18(g) and (iv) any Taxes imposed under FATCA.

“Existing Credit Agreement” has the meaning specified in the second paragraph of this Agreement.

“Existing Letter of Credit” shall mean each of the letters of credit described by applicant, date of issuance, letter of credit number, amount, beneficiary and the date of expiry on Schedule V hereto.

“Extension Effective Date” has the meaning specified in Section 2.06(c).

“Extension of Credit” means the making of a Borrowing, the issuance of a Letter of Credit or the amendment of any Letter of Credit having the effect of extending the stated termination date thereof or increasing the maximum amount available to be drawn thereunder. For purposes of this Agreement, a Conversion shall not constitute an Extension of Credit.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Internal Revenue Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement.

“FCA” has the meaning assigned to such term in Section 1.06.

“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s Federal funds transactions by depositary institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as the Federal funds effective rate.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Fee Letters” means (i) the letter agreements, each dated as of June 2, 2022, among the Borrower and certain of the Joint Lead Arrangers, and (ii) the Agent Fee Letter, in each case, as amended, restated, supplemented or otherwise modified from time to time.

“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to any Benchmark. For the avoidance of doubt the initial Floor for Adjusted Term SOFR shall be 0.00%.

“Foreign Lender” means a Lender that is not a U.S. Person.

“Foreign Plan” means any pension, profit-sharing, deferred compensation, or other employee benefit plan, program or arrangement (other than a Pension Plan or a Multiemployer Plan) maintained by any Subsidiary of the Borrower that, under applicable local foreign law, is required to be funded through a trust or other funding vehicle.

“Fronting Commitment” means, with respect to any LC Issuing Bank, the aggregate stated amount of all Letters of Credit that such LC Issuing Bank agrees to issue (subject to the LC Commitment Amount), as modified from time to time pursuant to an agreement signed by such LC Issuing Bank and the Borrower. With respect to each Lender that is an LC Issuing Bank on the date hereof, such LC Issuing Bank’s Fronting Commitment is listed on Schedule II, and with respect to any Lender that becomes an LC Issuing Bank after the date hereof, such Lender’s Fronting Commitment will be the amount agreed between the Borrower and such Lender at the time that such Lender becomes an LC Issuing Bank, in each case, as such Fronting Commitment may be modified in accordance with the terms of this Agreement.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any LC Issuing Bank, such Defaulting Lender’s Commitment Percentage of the LC Outstandings with respect to Letters of Credit issued by such LC Issuing Bank other than LC Outstandings as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” has the meaning specified in Section 1.03.

“Governmental Approval” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guaranty” of any Person means (i) any obligation, contingent or otherwise, of such Person to pay any Debt of any other Person and (ii) all reasonably quantifiable obligations of such Person under indemnities or under support or capital contribution agreements, and other reasonably quantifiable obligations (contingent or otherwise) to purchase or otherwise to assure a creditor against loss in respect of, or to assure an obligee against loss in respect of, any Debt of any other Person guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss; provided that the term “Guaranty” shall not include endorsements for collection or deposit in the ordinary course of business or the grant of a Lien in connection with Project Finance Debt.

“Hazardous Materials” means (i) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“Indemnified Party” has the meaning specified in Section 8.04(b).

“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.

“Initial Lenders” has the meaning specified in the first paragraph of this Agreement.

“Interest Period” means, for each SOFR Rate Revolving Loan comprising part of the same Borrowing, the period commencing on the date of such SOFR Rate Revolving Loan or the date of the Conversion of any Base Rate Revolving Loan into such SOFR Rate Revolving Loan and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to SOFR Rate Revolving Loans, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, three or six months or such other period acceptable to all the Lenders, as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 noon (New York City Time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(i) the Borrower may not select any Interest Period that (A) ends after the latest Termination Date in effect at such time or (B) has been removed pursuant to Section 2.12(e);

(ii) Interest Periods commencing on the same date for SOFR Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;

(iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

(iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“Investment” in any Person means (i) any direct or indirect loan, advance or other extension of credit made to such Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), (ii) any capital contribution to such Person, (iii) any purchase of an ownership interest in such Person, (iv) any purchase of all or substantially all of the assets of such Person or (v) any purchase of assets constituting a business unit of such Person. For purposes of this definition, the Dollar value of any Investment made by any Person shall be the amount of capital invested by such Person in such Investment.

“IRS” means the U.S. Internal Revenue Service.

“Joint Lead Arrangers” means MUFG Union Bank, N.A., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Mizuho Bank, Ltd., Citibank, N.A., Barclays Bank PLC, U.S. Bank National Association and Sumitomo Mitsui Banking Corporation.

“LC Collateral Account” has the meaning specified in Section 6.02.

“LC Commitment Amount” means $500,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.08.

“LC Fee” has the meaning specified in Section 2.05(c).

“LC Fronting Fee” has the meaning specified in Section 2.05(d).

“LC Issuing Bank” means each Lender identified as an “LC Issuing Bank” on Schedule II and any other Lender or Affiliate of a Lender that shall agree to issue a Letter of Credit pursuant to Section 2.04.

“LC Outstandings” means, on any date of determination, the sum of (i) the undrawn stated amounts of all Letters of Credit that are outstanding on such date plus (ii) the aggregate principal amount of all unpaid reimbursement obligations of the Borrower on such date with respect to payments made by any LC Issuing Bank under any Letter of Credit (excluding reimbursement obligations that have been repaid with the proceeds of any Borrowing). The LC Outstandings with respect to any Lender at any time shall be its Commitment Percentage of the total LC Outstandings at such time.

“LC Payment Notice” has the meaning specified in Section 2.04(e).

“Lenders” means the Initial Lenders and each Person that shall become party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

“Letter of Credit” means (a) a standby letter of credit issued by an LC Issuing Bank pursuant to Section 2.04 and (b) any Existing Letter of Credit, in each case, for clauses (a) and (b) as such letter of credit may be amended, modified, extended, renewed or replaced from time to time in accordance with the terms of this Agreement.

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“Loan Documents” means, collectively, (i) this Agreement, (ii) the Fee Letters and (iii) any promissory note issued pursuant to Section 2.10(d).

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Margin Regulations” means Regulations T, U and X of the Federal Reserve Board, as in effect from time to time.

“Margin Stock” has the meaning specified in the Margin Regulations.

“Material Adverse Effect” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation, contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent, any LC Issuing Bank or any Lender to enforce its rights under the Loan Documents.

“Material Subsidiaries” means MidAmerican Energy Company, PacifiCorp, BHE Pipeline Group, LLC and any other Subsidiary of the Borrower with respect to which (x) the Borrower’s percentage ownership interest in such Subsidiary multiplied by (y) the book value of the Consolidated Assets of such Subsidiary represents at least 15% of the Consolidated Assets of the Borrower as reflected in the latest financial statements of the Borrower delivered pursuant to clause (i) or (ii) of Section 5.01(h).

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of all LC Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the LC Issuing Banks in their sole discretion.

“Moody’s” means Moody’s Investors Service, Inc.

“Moody’s Rating” means, on any date of determination, the rating most recently announced by Moody’s with respect to any senior unsecured, non-credit enhanced Debt of the Borrower or, if such rating is not available, the corporate credit rating of the Borrower most recently announced by Moody’s.

“MUFG” has the meaning specified in the first paragraph of this Agreement.

“Multiemployer Plan” means any “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA), which is contributed to by (or to which there is or may be an obligation to contribute of) the Borrower or any of its ERISA Affiliates or with respect to which the Borrower or any of its ERISA Affiliates has, or could reasonably be expected to have, any liability.

“New York City Time” means the time in New York, New York.

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Required Lenders.

“Non-Defaulting Lender” means, at the time of determination, a Lender that is not a Defaulting Lender.

“non-performing Lender” has the meaning specified in Section 2.04(f).

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a Federal funds transaction quoted at 11:00 A.M. (New York City Time) on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.20).

“Outstanding Credits” means, on any date of determination, the sum of (i) the aggregate principal amount of all Loans outstanding on such date plus (ii) the LC Outstandings on such date. The Outstanding Credits with respect to any Lender at any time shall be its Commitment Percentage of the total Outstanding Credits at such time.

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight Federal funds and overnight eurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“Participant” has the meaning assigned to such term in Section 8.07(d).

“Participant Register” has the meaning specified in Section 8.07(d).

“Patriot Act” has the meaning specified in Section 8.14.

“Payment Recipient” has the meaning assigned to it in Section 7.09(a).

“PBGC” means the U.S. Pension Benefit Guaranty Corporation (or any successor).

“Pension Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA) (other than a Multiemployer Plan), subject to the provisions of Title IV of ERISA or Section 412 of the Internal Revenue Code or Section 302 of ERISA, maintained or contributed to by the Borrower or any of its ERISA Affiliates or to which the Borrower or any of its ERISA Affiliates has or may have an obligation to contribute (or is deemed under Section 4069 of ERISA to have maintained or contributed to or to have had an obligation to contribute to, or otherwise to have liability with respect to) such plan.

“Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(a) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable, including zoning and landmarking restrictions; (v) any judgment Lien, unless an Event of Default under Section 6.01(e) shall have occurred and be continuing with respect thereto; (vi) any Lien on any asset of any Person existing at the time such Person is acquired by, or merged or consolidated with or into, the Borrower or any Subsidiary of the Borrower and not created in contemplation of such event; (vii) pledges and deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Pollution Bonds or cash or cash equivalents securing (A) the obligation of the Borrower or any Material Subsidiary to reimburse the issuer of a Pollution LC for a drawing on such Pollution LC for the purpose of purchasing Pollution Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Pollution Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

“Person” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Platform” has the meaning specified in Section 8.02(d)(i).

“Pollution Bonds” means bonds issued for the purpose of financing all or any part of the cost of facilities acquired or constructed for use by the Borrower or any Material Subsidiary; provided that, the interest on such bonds is exempt from tax under the Internal Revenue Code as in effect when the debt evidenced by such bonds is incurred.

“Pollution LC” means a letter of credit issued for the purpose of (i) supporting payments of principal of and interest on Pollution Bonds or (ii) providing funds to purchase Pollution Bonds from the holders thereof.

“Preferred Securities” means, collectively, (i) any series of preferred securities issued to the BHE Shareholders or any controlled Affiliates of Berkshire Hathaway and, without duplication, any junior subordinated debentures issued by the Borrower in connection with any such preferred securities to the trust issuing such preferred securities, in each case set forth on Schedule IV hereto, and (ii) any other series of preferred securities issued to BHE Shareholders or any controlled Affiliates of Berkshire Hathaway and other junior subordinated debentures or similar instruments issued by the Borrower in connection with any such preferred securities to the trust issuing such preferred securities, in each case of this clause (ii), with material terms and conditions substantially similar to, or not materially more burdensome on the Borrower than, the preferred securities and related junior subordinated debentures described in clause (i).

“Project Finance Debt” means Debt of any Subsidiary of the Borrower (i) that is (A) not recourse to the Borrower other than with respect to Liens granted by the Borrower on direct or indirect equity interests in such Subsidiary to secure such Debt and limited Guaranties of, or equity commitments with respect to, such Debt by the Borrower, which Liens, limited Guaranties and equity commitments are of a type consistent with other limited recourse project financings, and other than customary contractual carve-outs to the non-recourse nature of such Debt consistent with other limited recourse project financings, and (B) incurred in connection with the acquisition, development, construction or improvement of any project, single purpose or other fixed assets of such Subsidiary, including Debt assumed in connection with the acquisition of such assets, or (ii) that represents an extension, renewal, replacement or refinancing of the foregoing, provided that, in the case of a replacement or refinancing, the principal amount of such new Debt shall not exceed the principal amount of the Debt being replaced or refinanced plus 10% of such principal amount.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“Rating Decline” means the occurrence of the following on, or within 90 days after, the earlier of (i) the occurrence of a Change of Control and (ii) the earlier of (x) the date of public notice of the occurrence of a Change of Control and (y) the date of the public notice of the Borrower’s (or its direct or indirect parent company’s) intention to effect a Change of Control, which 90-day period will be extended so long as the S&P Rating or Moody’s Rating is under publicly announced consideration for possible downgrading by S&P or Moody’s, as applicable: the S&P Rating is reduced to any rating level below BBB+ or the Moody’s Rating is reduced to any rating level below Baa1 (or both the S&P Rating and the Moody’s Rating become unavailable).

“Recipient” means (i) the Administrative Agent, (ii) any Lender and (iii) any LC Issuing Bank, as applicable.

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Adjusted Term SOFR, 5:00 a.m. (Chicago time) on the day that is two Business Days preceding the date of such setting or (2) if such Benchmark is not Adjusted Term SOFR, the time determined by the Administrative Agent in its reasonable discretion.

“Register” has the meaning specified in Section 8.07(c).

“Reimbursement Amount” has the meaning specified in Section 2.04(d).

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Relevant Governmental Body” means, the Federal Reserve Board and/or the NYFRB, the CME Term SOFR Administrator, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

“Removal Effective Date” has the meaning specified in Section 7.05(b).

“Reportable Compliance Event” means that the Borrower or any of its Subsidiaries becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Corruption Law or any predicate crime to any Anti-Corruption Law.

“Request for Issuance” means a request made pursuant to Section 2.04 in the form of Exhibit B.

“Required Lenders” means at any time Lenders owed in excess of 50% of the then aggregate unpaid principal amount of the Revolving Loans and participation obligations with respect to the LC Outstandings, or, if there are no Outstanding Credits, Lenders having in excess of 50% in interest of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.01). The Commitments, outstanding Loans and participation obligations with respect to the LC Outstandings for any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“Resignation Effective Date” has the meaning specified in Section 7.05(a).

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

“Revolving Loan” means a Loan by a Lender to the Borrower pursuant to Section 2.02 as part of a Borrowing and refers to a Base Rate Revolving Loan or a SOFR Rate Revolving Loan.

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of comprehensive Sanctions (at the time of this Agreement, the so - called Donetsk People’s Republic, the so- called Luhansk People’s Republic, the Crimea Region of Ukraine, Russia, Cuba, Iran, North Korea and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or the U.S. Department of the Treasury, or maintained by the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom, as may be amended, supplemented or substituted from time to time, (b) any Person organized or ordinarily resident or located in a Sanctioned Country or (c) any Person controlled by, or acting on behalf of, any such Person described in clause (a) or (b). For purposes of this definition, “control” of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S. Department of State or the U.S. Department of Treasury, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“S&P” means S&P Global Ratings, a business unit of S&P Global, Inc.

“S&P Rating” means, on any date of determination, the rating most recently announced by S&P with respect to any senior unsecured, non-credit enhanced Debt of the Borrower or, if such rating is not available, the corporate credit rating of the Borrower most recently announced by S&P.

“SEC” means the U.S. Securities and Exchange Commission.

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR”.

“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”.

“SOFR Rate Revolving Loan” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“Stated Expiry Date” means the stated expiration date of any Letter of Credit issued or deemed to be issued pursuant to this Agreement; provided, however, that no Stated Expiry Date may be requested or included in any such Letter of Credit where (i) such date would be later than the fifth Business Day preceding the Termination Date then applicable to the Lender that is the LC Issuing Bank for such Letter of Credit, (ii) such date would be later than one year after the date of issuance of such Letter of Credit (subject, for the avoidance of doubt, to the ability to provide for an automatic renewal mechanic in accordance with Section 2.04(a)), or (iii) after taking into account (A) the respective Termination Dates then in effect with respect to all Lenders on the date of issuance or any extension of such Letter of Credit, and (B) the respective Stated Expiry Dates then in effect with respect to all other Letters of Credit then outstanding, the maximum amount of the LC Outstandings under all Letters of Credit (including such Letter of Credit) then outstanding would exceed the total LC Commitment Amount scheduled to be in effect at any time during the period such Letter of Credit is scheduled to remain in effect, as determined by the Administrative Agent.

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Subsidiary Preferred Securities” means, collectively, the 7.00% and 6.00% Series of Serial Preferred Stock of PacifiCorp.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to Adjusted Term SOFR.

“Term SOFR Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.

“Term SOFR” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.

“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to Term SOFR has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such Term SOFR Determination Day.

“Termination Date” means the earlier to occur of (i) June 30, 2025, or such later date that may be established for any Lender from time to time pursuant to Section 2.06 hereof, and (ii) the date of termination in whole of the Commitments available to the Borrower pursuant to Section 2.08 or 6.01.

“Type” refers to the distinction between Loans bearing interest at the Base Rate and Loans bearing interest at Adjusted Term SOFR.

“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.18(g)(ii).

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

“Withholding Agent” means the Borrower and the Administrative Agent.

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

SECTION 1.02. Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as in effect from time to time (“GAAP”). If any “Accounting Change” (as defined below) shall occur and such change results in a change in the calculation of financial covenants, standards or terms in this Agreement, and either the Borrower or the Required Lenders (through the Administrative Agent) shall request the same to the other parties hereto in writing, the Borrower and the Administrative Agent shall enter into negotiations to amend the affected provisions of this Agreement with the desired result that the criteria for evaluating the Borrower’s consolidated financial condition and results of operations shall be substantially the same after such Accounting Change as if such Accounting Change had not been made. Once such request has been made, until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred. “Accounting Change” means a change in accounting principles required by the promulgation of any final rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC (or successors thereto or agencies with similar functions).

SECTION 1.04. Classification of Loans and Borrowings.

For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Adjusted Term SOFR Loan”). Borrowings also may be classified and referred to by Type (e.g., a “Adjusted Term SOFR Borrowing”).

SECTION 1.05. Other Interpretive Provisions.

As used herein, except as otherwise specified herein, (i) references to any Person include its successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; (ii) references to any Applicable Law include amendments, supplements and successors thereto; (iii) references to specific sections, articles, annexes, schedules and exhibits are to this Agreement; (iv) words importing any gender include the other gender; (v) the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City Time unless otherwise specified.

SECTION 1.06. Interest Rates; Benchmark Notification.

The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.12(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

ARTICLE II
AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

SECTION 2.01. The Revolving Loans.

(a)Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Loans to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date applicable to such Lender in an aggregate outstanding amount not to exceed at any time such Lender’s Available Commitment at such time. Within the limits of each Lender’s Commitment and as hereinabove and hereinafter provided, including without limitation Section 2.01(b), the Borrower may request a Borrowing hereunder, and repay or prepay Revolving Loans pursuant to Section 2.14 and utilize the resulting increase in the Available Commitments for further Extensions of Credit in accordance with the terms hereof.

(b)In no event shall the Borrower be entitled to request or receive any Borrowing that (i) would exceed the Available Commitments or (ii) would cause the Outstanding Credits to exceed the Commitments.

SECTION 2.02. Making the Revolving Loans.

(a) Each Borrowing shall be in an amount not less than $1,000,000 (or, if less, the Available Commitments at such time) or an integral multiple of $100,000 in excess thereof and shall consist of Revolving Loans of the same Type made on the same day by the Lenders ratably according to their respective Commitment Percentages. Each Borrowing shall be made on notice, given not later than 1:00 P.M. (New York City Time) on the third U.S. Government Securities Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of SOFR Rate Revolving Loans, or not later than 1:00 P.M. (New York City Time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Revolving Loans, by the Borrower to the Administrative Agent, which shall give to each Lender prompt written notice thereof. Each such notice of a Revolving Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed immediately in writing or facsimile in substantially the form of Exhibit A hereto, specifying therein the requested (i) Borrowing Date for such Borrowing, (ii) Type of Revolving Loans comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of SOFR Rate Revolving Loans, the initial Interest Period for each such Revolving Loan. Each Lender shall, before 2:00 P.M. (New York City Time) (or, for Borrowings consisting of Base Rate Revolving Loans for which notice was provided to the Lenders after 12:00 noon (New York City Time) but no later than 1:00 P.M. (New York City Time), before 3:00 P.M. (New York City Time)) on the applicable Borrowing Date, make available for the account of its Lending Office to the Administrative Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of the Borrowing to be made on such Borrowing Date. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower no later than 3:30 P.M. (New York City Time) in such manner as the Borrower shall have specified in the applicable Notice of Borrowing.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select SOFR Rate Revolving Loans for any Borrowing if the aggregate amount of such Borrowing is less than $1,000,000 or if the obligation of the Lenders to make SOFR Rate Revolving Loans shall then be suspended pursuant to Section 2.12(b), 2.13 or 2.16, and (ii) Borrowings of more than one Type may be outstanding at the same time; provided, however, there shall be not more than 10 Borrowings at any one time outstanding.

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to comprise SOFR Rate Revolving Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Loan to be made by such Lender as part of such Borrowing when such Revolving Loan, as a result of such failure, is not made on such date.

(d) Unless the Administrative Agent shall have received written notice from a Lender prior to any Borrowing Date or, in the case of a Base Rate Loan, prior to the time of Borrowing, that such Lender will not make available to the Administrative Agent such Lender’s Loan as part of the Borrowing to be made on such Borrowing Date, the Administrative Agent may, but shall not be required to, assume that such Lender has made such portion available to the Administrative Agent on such Borrowing Date in accordance with subsection (a) of this Section 2.02, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Loan available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. [Reserved]

SECTION 2.04. Letters of Credit.

(a)Subject to the terms and conditions hereof, each LC Issuing Bank agrees to issue Letters of Credit from time to time for the account of the Borrower (or to extend the stated maturity thereof or to amend or modify the terms thereof), in an aggregate stated amount not exceeding such LC Issuing Bank’s Fronting Commitment, up to a maximum aggregate stated amount for all Letters of Credit at any one time outstanding equal to the LC Commitment Amount. Such issuance shall occur on not less than two Business Days’ prior notice thereof by the Borrower’s delivery of (x) a Request for Issuance for such Letter of Credit to the Administrative Agent and the LC Issuing Bank for such Letter of Credit and (y) such LC Issuing Bank’s standard form of Letter of Credit application for the requested Letter of Credit to the letter of credit department of such LC Issuing Bank for the account of the Borrower. Each Letter of Credit shall be issued in a form acceptable to the applicable LC Issuing Bank. Each Request for Issuance shall specify (i) the identity of the applicable LC Issuing Bank, (ii) the date (which shall be a Business Day) of issuance of such Letter of Credit (or the date of effectiveness of such extension, modification or amendment) and the Stated Expiry Date thereof, (iii) the proposed stated amount of such Letter of Credit (which amount (A) shall not be less than $100,000 and (B) may be subject to any automatic increase and reinstatement provisions), (iv) the name and address of the beneficiary of such Letter of Credit and (v) a statement of drawing conditions applicable to such Letter of Credit. If such Request for Issuance relates to an amendment or modification of a Letter of Credit, it shall be accompanied by the consent of the beneficiary of the Letter of Credit thereto. If so requested by the Borrower, a Letter of Credit may provide that it is automatically renewable for additional one-year periods if subject to an ability of the applicable LC Issuing Bank to not renew by giving notice of the same to the beneficiary of such Letter of Credit. Each Request for Issuance shall be irrevocable unless modified or rescinded by the Borrower prior to the issuance by the applicable LC Issuing Bank of the requested Letter of Credit or prior to the effectiveness of the requested extension, modification or amendment to a Letter of Credit, as applicable. Upon fulfillment of the applicable conditions precedent and the other requirements set forth herein, the relevant LC Issuing Bank shall issue (or extend, amend or modify) such Letter of Credit and provide notice and a copy thereof to the Administrative Agent, which shall promptly furnish copies thereof to the Lenders that shall so request; provided that the LC Issuing Bank shall not issue or amend any Letter of Credit if such LC Issuing Bank has received notice from the Administrative Agent that the applicable conditions precedent have not been satisfied. The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement. (i) On the Closing Date with respect to all Existing Letters of Credit and (ii) upon the date of issuance with respect to all other Letters of Credit, each Lender shall be deemed, without further action by any party hereto, to have irrevocably and unconditionally purchased from such LC Issuing Bank without recourse a participation in such Letter of Credit equal to such Lender’s Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Lender’s participation obligations in respect of Existing Letters of Credit shall be governed by this Agreement. Upon each modification of a Letter of Credit by any LC Issuing Bank which modifies the aggregate amount available to be drawn under such Letter of Credit, such LC Issuing Bank and the Lenders shall be deemed, without further action by any party hereto, to have purchased or sold, as appropriate, participations in such Letter of Credit such that each Lender’s participation in such Letter of Credit shall equal such Lender’s Commitment Percentage of such modified aggregate amount available to be drawn under such Letter of Credit. Each Letter of Credit shall utilize the Commitment of each Lender by an amount equal to the amount of such participation.

(b) The Borrower may from time to time appoint one or more additional Lenders (with the consent of any such Lender, which consent may be withheld in the sole discretion of each Lender) to act, either directly or through an Affiliate of such Lender, as an LC Issuing Bank hereunder. Any such appointment and the terms thereof shall be evidenced in a separate written agreement executed by the Borrower and the relevant LC Issuing Bank, a copy of which agreement shall be delivered by the Borrower to the Administrative Agent. The Administrative Agent shall give prompt notice of any such appointment to the other Lenders. Upon such appointment, if and for so long as such Lender shall have any obligation to issue any Letter of Credit hereunder or any Letter of Credit issued by such Lender shall remain outstanding, such Lender shall be deemed to be, and shall have all the rights and obligations of, an “LC Issuing Bank” under this Agreement.

(c) No Letter of Credit shall be requested, issued or modified hereunder if, after the issuance or modification thereof, (i) the Outstanding Credits would exceed the Commitments then scheduled to be in effect until the latest Termination Date, (ii) that portion of the LC Outstandings arising from Letters of Credit issued by an LC Issuing Bank would exceed the amount of such LC Issuing Bank’s Fronting Commitment or (iii) the LC Outstandings would exceed the LC Commitment Amount. No LC Issuing Bank shall be under any obligation to issue any Letter of Credit if any order, judgment or decree of any Governmental Authority shall by its terms purport to enjoin or restrain such LC Issuing Bank from issuing such Letter of Credit, or any law applicable to such LC Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such LC Issuing Bank shall prohibit, or request that the LC Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the LC Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the LC Issuing Bank is not otherwise compensated or required to be compensated hereunder), which restriction, reserve or capital requirement was not in effect on the date hereof, or shall impose upon the LC Issuing Bank any loss, cost or expense (not reimbursed or required to be reimbursed) that was not applicable on the date hereof and that the LC Issuing Bank in good faith deems material to it.

(d) The Borrower hereby agrees to pay to the Administrative Agent for the account of each LC Issuing Bank and each Lender that has funded its participation in the reimbursement obligations of the Borrower pursuant to subsection (e) below, on demand made by such LC Issuing Bank to the Borrower, on and after each date on which such LC Issuing Bank shall pay any amount under any Letter of Credit issued by such LC Issuing Bank, a sum equal to the amount so paid (the “Reimbursement Amount”). Any Reimbursement Amount shall bear interest, payable on demand, from the date so paid by such LC Issuing Bank until repayment to such LC Issuing Bank in full at a fluctuating interest rate per annum equal to the interest rate applicable to Base Rate Loans plus, if any amount paid by such LC Issuing Bank under a Letter of Credit is not reimbursed by the Borrower within three Business Days, 2%. The Borrower may satisfy its obligation hereunder to repay the Reimbursement Amount by requesting a Borrowing under Section 2.02 (and which Borrowing shall be subject to the conditions in Section 2.02) in the amount of such Reimbursement Amount, and the proceeds of such Borrowing may be applied to satisfy the Borrower’s obligations to such LC Issuing Bank or the Lenders, as the case may be. The Borrower’s obligation to pay any Reimbursement Amount in respect of Existing Letters of Credit shall be governed by the terms of this Agreement.

(e) If any LC Issuing Bank shall not have been reimbursed in full for any Reimbursement Amount in respect of a Letter of Credit issued by such LC Issuing Bank on the date of such payment, such LC Issuing Bank shall give the Administrative Agent and each Lender prompt notice thereof (an “LC Payment Notice”) no later than 12:00 noon (New York City Time) on the Business Day immediately succeeding the date of such payment by such LC Issuing Bank. Each Lender shall fund the participation that such Lender purchased pursuant to Section 2.04(a) by paying to the Administrative Agent for the account of such LC Issuing Bank an amount equal to such Lender’s Commitment Percentage of such Reimbursement Amount paid by such LC Issuing Bank, plus interest on such amount at a rate per annum equal to the Federal Funds Effective Rate, for the first three days from the date of the payment by such LC Issuing Bank, and, thereafter, until the date of payment to such LC Issuing Bank by such Lender, at a rate of interest equal to the rate applicable to Base Rate Loans. Each such payment by a Lender shall be made not later than 3:00 P.M. (New York City Time) on the later to occur of (i) the Business Day immediately following the date of such payment by such LC Issuing Bank and (ii) the Business Day on which such Lender shall have received an LC Payment Notice from such LC Issuing Bank. Each Lender’s obligation to make each such payment to the Administrative Agent for the account of such LC Issuing Bank shall be several and shall not be affected by the occurrence or continuance of a Default or the failure of any other Lender to make any payment under this Section 2.04(e). Each Lender further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(f) The failure of any Lender to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above shall not relieve any other Lender of its obligation to make payment, but no Lender shall be responsible for the failure of any other Lender. If any Lender (a “non-performing Lender”) shall fail to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above, then for so long as such failure shall continue, such LC Issuing Bank shall be deemed, for purposes of Sections 6.01 and 8.01 hereof, to be a Lender owed a Borrowing in an amount equal to the outstanding principal amount due and payable by such non-performing Lender to the Administrative Agent for the account of such LC Issuing Bank pursuant to subsection (e) above. Any non-performing Lender and the Borrower (without waiving any claim against such non-performing Lender for such non-performing Lender’s failure to fund its participation in the reimbursement obligations of the Borrower under subsection (e) above) severally agree to pay to the Administrative Agent for the account of such LC Issuing Bank forthwith on demand such amount, together with interest thereon for each day from the date such non-performing Lender would have funded its participation had it complied with the requirements of subsection (e) above until the date such amount is paid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to Base Rate Loans plus, if any amount paid by such LC Issuing Bank under a Letter of Credit is not reimbursed by the Borrower within three Business Days, 2%, in accordance with Section 2.04(d), and (ii) in the case of such non-performing Lender, the Federal Funds Effective Rate, for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Base Rate Loans.

(g) The payment obligations of each Lender under Section 2.04(e) and of the Borrower under this Agreement in respect of any payment under any Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances:

(i)any lack of validity or enforceability of this Agreement or any other agreement or instrument relating thereto or to such Letter of Credit;

(ii)any amendment or waiver of, or any consent to departure from, the terms of this Agreement or such Letter of Credit;

(iii)the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary, or any transferee, of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), any LC Issuing Bank, or any other Person, whether in connection with this Agreement, the transactions contemplated hereby, thereby or by such Letter of Credit, or any unrelated transaction;

(iv)any statement or any other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v)payment in good faith by any LC Issuing Bank under the Letter of Credit issued by such LC Issuing Bank against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit;

(vi)the use that may be made of any Letter of Credit by, or any act or omission of, the beneficiary of any Letter of Credit (or any Person for which the beneficiary may be acting); or

(vii)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(h) Without limiting any other provision of this Section 2.04, for purposes of this Section 2.04 any LC Issuing Bank may rely upon any oral, telephonic, telegraphic, facsimile, electronic, written or other communication believed in good faith to have been authorized by the Borrower, whether or not given or signed by an authorized Person of the Borrower.

(i) The Borrower assumes all risks of the acts and omissions of any beneficiary or transferee of any Letter of Credit. Neither any LC Issuing Bank, the Lenders nor any of their respective officers, directors, employees, agents or Affiliates shall be liable or responsible for, and the Borrower’s reimbursement obligation in respect of any Letter of Credit shall not be affected by, (i) the use that may be made of such Letter of Credit or any acts or omissions of any beneficiary or transferee thereof in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by any LC Issuing Bank against presentation of documents that do not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (iv) any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower or of its Affiliates against the beneficiary of any Letter of Credit or any such transferee; (v) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or (vi) any other circumstances whatsoever in making or failing to make payment under such Letter of Credit, except that the Borrower and each Lender shall have the right to bring suit against each LC Issuing Bank, and each LC Issuing Bank shall be liable to the Borrower and any Lender, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower or such Lender that the Borrower or such Lender proves, in a court of competent jurisdiction by final and nonappealable judgment, were caused by such LC Issuing Bank’s willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, each LC Issuing Bank may accept sight drafts and accompanying certificates presented under the Letter of Credit issued by such LC Issuing Bank that appear on their face to be in substantial compliance with the terms and conditions of the Letter of Credit, without responsibility for further investigation, regardless of any notice or information to the contrary, and payment against such documents shall not constitute willful misconduct or gross negligence by such LC Issuing Bank. Notwithstanding the foregoing, no Lender shall be obligated to indemnify the Borrower for damages caused by any LC Issuing Bank’s willful misconduct or gross negligence.

(j) In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an LC Issuing Bank relating to any Letter of Credit issued by such LC Issuing Bank (including, for the avoidance of doubt, any Existing Letter of Credit), the terms and conditions of this Agreement shall control. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any application or other agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

(k) Any LC Issuing Bank may resign at any time by giving written notice thereof to the Administrative Agent, Lenders, the other LC Issuing Banks (if any) and the Borrower, provided that (i) there are no Letters of Credit outstanding with respect to such LC Issuing Bank at such time or (ii) unless the Borrower shall have agreed otherwise, another Lender or Affiliate thereof reasonably acceptable to the Borrower has agreed to serve as an LC Issuing Bank and commits in writing to issue one or more Letters of Credit in an aggregate amount at least equal to those of the resigning LC Issuing Bank. After the resignation of an LC Issuing Bank hereunder, such resigning LC Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an LC Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit. Upon any such resignation, the Borrower and the resigning LC Issuing Bank may agree to replace or terminate any outstanding Letters of Credit issued by such LC Issuing Bank and to designate one or more Lenders as LC Issuing Banks to replace such LC Issuing Bank.

SECTION 2.05. Fees.

(a)The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the aggregate unused amount of such Lender’s Commitment (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the latest Termination Date applicable to such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing June 30, 2022, and ending on such Termination Date. The commitment fee for any period will be equal to the Commitment Fee Rate in effect from time to time during such period, times an amount equal to the Commitments in effect at such time minus the aggregate principal amount of Loans and Letters of Credit outstanding during such period.

(b)The Borrower agrees to pay the fees payable by the Borrower in such amounts and on such terms as set forth in the Fee Letters.

(c)The Borrower agrees to pay to the Administrative Agent for the account of each Lender a fee (the “LC Fee”) on the average daily aggregate principal amount of each such Lender’s Commitment Percentage of the LC Outstandings (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the later to occur of (x) the Termination Date applicable to such Lender and (y) the date on which no Letters of Credit are outstanding, payable quarterly in arrears on the last day of each March, June, September and December (commencing on June 30, 2022), and on such later date, at a rate equal at all times to the Applicable Margin in effect from time to time for SOFR Rate Revolving Loans.

(d) The Borrower agrees to pay to the Administrative Agent for the account of each LC Issuing Bank, (i) a fee (the “LC Fronting Fee”) equal to 0.20% of the stated amount of each Letter of Credit issued by such LC Issuing Bank hereunder, payable quarterly in arrears on the last day of each March, June, September and December (commencing on June 30, 2022) and ending on the Termination Date or such later date on which no such letter of credit issued by such LC Issuing Bank shall be outstanding, with the calculation based on the actual number of days elapsed in a year of 360 days and (ii) customary issuance, maintenance, drawing and administration fees in respect of such letters of credit.

(e) The Borrower shall pay to the Administrative Agent, for its own account, the annual administrative fee at the times and in the amount set forth in the Agent Fee Letter.

SECTION 2.06. Extension of the Termination Date.

(a) During the period from July 1, 2022 until the date that is 30 days prior to the then-applicable Termination Date, the Borrower may request by written notice (an “Extension Request”) made to the Administrative Agent (which shall promptly notify the Lenders thereof) one-year extensions of the Termination Date applicable to each Lender. Each Lender shall notify the Administrative Agent by the date that is 30 days after the Administrative Agent provides the Lenders with written notice of the Borrower’s extension request that either (A) such Lender declines to consent to extending the Termination Date or (B) such Lender consents to extending the Termination Date. Any Lender not responding within the above time period shall be deemed to have declined to extend the Termination Date. The consent of a Lender to any such extension shall be in the sole discretion of such Lender. The Administrative Agent shall, after receiving the notifications from all of the Lenders or the expiration of such period, whichever is earlier, notify the Borrower and the Lenders of the results thereof. For the avoidance of doubt and subject to the terms and conditions set forth herein, the Borrower may request an unlimited number of extensions pursuant to this Section.

(b) If any Lender declines, or is deemed to have declined, to consent to such request for extension (each a “Declining Lender”), the Borrower shall have the right to replace such Declining Lender with an Eligible Assignee in accordance with Section 2.20(b). Any Lender replacing a Declining Lender shall be deemed to have consented to such request for extension (regardless of when such replacement is effective) and shall not be deemed to be a Declining Lender.

(c) If the Required Lenders have consented to the extension of the Termination Date, the Termination Date of each Lender that consented to the extension shall be extended to the date that is one year after such Lender’s then-effective Termination Date, effective as of the date to be determined by the Administrative Agent and the Borrower (the “Extension Effective Date”); provided, that no such extension shall be effective prior to a date that would increase the remaining tenor of any Loans or Commitments hereunder beyond 3 years and 2 months. In connection with the effectiveness of any Extension Request, the Administrative Agent may (with the Borrower’s consent not to be unreasonably withheld) seek to amend this Agreement with requisite lender consent in accordance with Section 8.01 to update operational, agency, and/or regulatory provisions to a form customarily included in credit agreements as of the Extension Effective Date with respect to which MUFG acts as administrative agent. Any such proposed amendments must be provided to the Borrower no later than fifteen (15) days after the Extension Request. On or prior to the Extension Effective Date, the Borrower shall deliver to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (i) the resolutions of the Borrower authorizing such extension and all Governmental Approvals (if any) required in connection with such extension, certified as being in effect as of the Extension Effective Date and the related incumbency certificate of the Borrower, (ii) a favorable opinion of counsel for the Borrower as to such matters as any Lender through the Administrative Agent may reasonably request and (iii) a certificate of the Borrower stating that on and as of such Extension Effective Date, and after giving effect to the extension to be effective on such date, all conditions precedent to an Extension of Credit under Section 3.02 are satisfied. On each Extension Effective Date, each Declining Lender being replaced by the Borrower pursuant to Section 2.06(b) shall have received payment in full of the principal amount of all Loans outstanding owing to such Declining Lender and all interest thereon and all fees and other amounts (including, without limitation, any amounts payable pursuant to Section 8.04(c)) payable to such Declining Lender accrued through such Extension Effective Date. Promptly following such Extension Effective Date, the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in the Lenders, the Commitments and each Lender’s Commitment Percentage as of such Extension Effective Date.

(d) Each LC Issuing Bank may, in its sole discretion, elect not to serve in such capacity following any extension of the Termination Date; provided that (i) the Borrower and the Administrative Agent may appoint a replacement for such resigning LC Issuing Bank, as the case may be, and (ii) whether such replacement is appointed shall not otherwise affect the extension of the Termination Date.

SECTION 2.07. Increase of the Commitments.

(a) The Borrower may, from time to time, request by written notice to the Administrative Agent to increase the Commitments by a maximum aggregate amount for all such increases of up to $750,000,000, by designating one or more Lenders or other financial institutions (that will become Lenders), in each case, meeting the requirements set forth in the definition of Eligible Assignee, that agree to accept all or a portion of such additional Commitments (each a “Designated Lender”).

(b) The Administrative Agent shall promptly notify the Designated Lenders of the Borrower’s request pursuant to subsection (a) above. Each Designated Lender shall notify the Administrative Agent by the date specified by the Administrative Agent (which date shall be a Business Day) that either (A) such Designated Lender declines to accept its additional Commitments or (B) such Designated Lender consents to accept the offered Commitments. Any Designated Lender not responding on or prior to the date specified by the Administrative Agent shall be deemed to have declined to accept the offered Commitments. The Administrative Agent shall, after receiving the notifications from all of the Designated Lenders or following the date specified in the notice to such Designated Lenders, whichever is earlier, notify the Borrower and the Lenders of the results thereof and the effective date of any additional Commitments. The effectiveness of such additional Commitments shall be subject to the condition precedent that the Borrower shall have delivered to the Administrative Agent (i) the resolutions of the Borrower authorizing such additional Commitments and all Governmental Approvals (if any) required in connection with such additional Commitments, certified as being in effect as of the effective date of such additional Commitments, (ii) a favorable opinion of counsel for the Borrower as to such matters as any Lender through the Administrative Agent may reasonably request and (iii) a certificate signed by a duly authorized officer of the Borrower, dated as of the effective date of such additional Commitments, stating that all conditions precedent to an Extension of Credit have been satisfied on and as of such effective date.

(c) Promptly following the effective date of any Commitment increase pursuant to this Section 2.07, (i) the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in Lenders, the Commitments and each Lender’s Commitment Percentage as of such effective date and (ii) the Borrower shall prepay the outstanding Borrowings (if any) in full, and shall simultaneously make new Borrowings hereunder in an amount equal to such prepayment, so that, after giving effect thereto, the Borrowings are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment increase). Prepayments made under this clause (c) shall not be subject to the notice requirements of Section 2.14.

SECTION 2.08. Termination or Reduction of the Commitments.

(a) The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Available Commitments, provided that (i) each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) no such termination or reduction shall be made that would reduce the aggregate Commitments to an amount less than the Outstanding Credits on the date of such termination or reduction. Subject to the foregoing, any reduction of the Commitments to an amount below $500,000,000 shall also result in a reduction of the LC Commitment Amount to the extent of such deficit (and if such reduction would cause the LC Commitment Amount to be less than the aggregate Fronting Commitments, with automatic reductions in the amount of each Fronting Commitment ratably in proportion to the amount of such reduction of the LC Commitment Amount unless, in the case of any LC Issuing Bank, such LC Issuing Bank consents otherwise). Each such notice of termination or reduction shall be irrevocable; provided, however, that a notice of termination delivered pursuant to this Section 2.08 may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the effective date specified in the notice of termination) if such condition is not satisfied.

(b) The Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.21(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any LC Issuing Bank or any Lender may have against such Defaulting Lender.

(c) The Commitment of each Lender shall automatically terminate on the Termination Date applicable to such Lender as provided in Section 2.06.

(d) Once terminated, a Commitment or any portion thereof may not be reinstated.

SECTION 2.09. Repayment of Loans.

(b) If at any time the aggregate principal amount of Outstanding Credits exceeds the Commitments, the Borrower shall pay or prepay so much of the Borrowings and/or Cash Collateralize the LC Outstandings as shall be necessary in order that the Outstanding Credits minus the principal amount of Cash Collateral securing the LC Outstandings will not exceed the Commitments.

SECTION 2.10. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(b) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(c) The entries made in the accounts maintained pursuant to subsections (a) and (b) of this Section 2.10 shall, to the extent permitted by Applicable Law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans and interest thereon in accordance with their terms.

(d) Any Lender may request that any Loans made by it be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, execute and deliver to such Lender one or more promissory notes payable to such Lender (or, if requested by such Lender, to such Lender and its assignees) and in a form reasonably satisfactory to the Administrative Agent. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to Section 8.07) be represented by one or more promissory notes in such form payable to the payee named therein.

SECTION 2.11. Interest on Loans.

The Borrower shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Loans. During such periods as such Loan is a Base Rate Revolving Loan, a rate per annum equal at all times to the sum of (x) the Base Rate plus (y) the Applicable Margin for Base Rate Loans in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Loan shall be Converted or paid in full.

(b) SOFR Rate Revolving Loans. During such periods as such Revolving Loan is a SOFR Rate Revolving Loan, a rate per annum equal at all times during each Interest Period for such Revolving Loan to the sum of (x) Adjusted Term SOFR for such Interest Period for such Revolving Loan plus (y) the Applicable Margin for SOFR Rate Revolving Loans in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such SOFR Rate Revolving Loan shall be Converted or paid in full.

SECTION 2.12. Interest Rate Determination.

(a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.12, if:

(i)the Administrative Agent determines (which determination shall be conclusive absent manifest error) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining Adjusted Term SOFR or Term SOFR (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period; or

(ii)the Administrative Agent is advised by the Required Lenders that prior to the commencement of any Interest Period for a Term Benchmark Borrowing, Adjusted Term SOFR for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Notice of Borrowing in accordance with the terms of Section 2.02, any Notice of Borrowing that requests a Term Benchmark Revolving Borrowing shall instead be deemed to be a Notice of Borrowing for a Base Rate Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.12(a), then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Notice of Borrowing in accordance with the terms of Section 2.02, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, a Base Rate Loan.

(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.

(c) Notwithstanding anything to the contrary herein or in any other Loan Document, in connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

(d) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.12, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.12.

(e) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(f) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to a Base Rate Borrowing. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.12, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, a Base Rate Loan.

SECTION 2.13. Conversion of Revolving Loans.

(a) Voluntary. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 noon (New York City Time) on the third U.S. Government Securities Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.12 and 2.16, Convert all or any part of Revolving Loans of one Type comprising the same Borrowing into Revolving Loans of the other Type or of the same Type but having a new Interest Period; provided, however, that any Conversion of SOFR Rate Revolving Loans into Base Rate Revolving Loans shall be made only on the last day of an Interest Period for such SOFR Rate Revolving Loans, any Conversion of Base Rate Revolving Loans into SOFR Rate Revolving Loans shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Loans shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Loans to be Converted, and (iii) if such Conversion is into SOFR Rate Revolving Loans, the duration of the initial Interest Period for each such Revolving Loan. Each notice of Conversion shall be irrevocable and binding on the Borrower.

(b) Mandatory.

(i) If the Borrower shall fail to select the Type of any Revolving Loan or the duration of any Interest Period for any Borrowing comprising SOFR Rate Revolving Loans in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.13(a), or if any proposed Conversion of a Borrowing that is to comprise SOFR Rate Revolving Loans upon Conversion shall not occur as a result of the circumstances described in subsection (c) below, or if an Event of Default has occurred and is continuing and SOFR Rate Revolving Loans are outstanding, the Administrative Agent will forthwith so notify the Borrower and the Lenders, and (i) such Revolving Loans will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Loans and (ii) the obligation of the Lenders to make, or to Convert Revolving Loans into, SOFR Rate Revolving Loans shall be suspended.

(ii) On the date on which the aggregate unpaid principal amount of SOFR Rate Revolving Loans comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Revolving Loans shall automatically Convert into Base Rate Revolving Loans.

(c) Failure to Convert. Each notice of Conversion given pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Borrowing that is to comprise SOFR Rate Revolving Loans upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender if, as a result of the failure of the Borrower to satisfy any condition to such Conversion (including, without limitation, the occurrence of any Default), such Conversion does not occur. The Borrower’s obligations under this subsection (c) shall survive the repayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and the termination of the Commitments.

(d) Limitation on Certain Conversions. Notwithstanding any other provision of this Agreement to the contrary, the Borrower may not borrow Revolving Loans at Adjusted Term SOFR or Convert Revolving Loans resulting in SOFR Rate Revolving Loans at any time an Event of Default has occurred and is continuing.

SECTION 2.14. Optional Prepayments of Loans.

The Borrower may prepay Loans, (i) upon at least two U.S. Government Securities Business Days’ notice, in the case of SOFR Rate Revolving Loans, and (ii) upon notice not later than 12:00 noon (New York City Time) on the date of prepayment, in the case of Base Rate Revolving Loans, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and, if such notice is given, the Borrower shall prepay the outstanding principal amount of the Loans comprising part of the same Borrowing in whole or ratably in part, without penalty, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $100,000 in excess thereof and (y) in the event of any such prepayment of a Adjusted Term SOFR Loan, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, assessment, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in Adjusted Term SOFR) or any LC Issuing Bank;

(ii)other than (A) Indemnified Taxes and (B) Excluded Taxes, subject any Recipient to any Taxes on, or change the basis of taxation of payments to any Recipient in respect of, its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)impose on any Lender or any LC Issuing Bank any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such LC Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, LC Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon the good faith request of such Lender, LC Issuing Bank or other Recipient, the Borrower will pay to such Lender, LC Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, LC Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or LC Issuing Bank determines that any Change in Law affecting such Lender or LC Issuing Bank or any lending office of such Lender or such Lender’s or LC Issuing Bank’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or LC Issuing Bank’s capital or on the capital of such Lender’s or LC Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by any LC Issuing Bank, to a level below that which such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuing Bank’s policies and the policies of such Lender’s or LC Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or LC Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or LC Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or LC Issuing Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender or LC Issuing Bank, as the case may be, promptly upon demand the amount shown as due on any such certificate.

(d) Delay in Requests. Failure or delay on the part of any Lender or LC Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or LC Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or LC Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or LC Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or LC Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.16. Illegality.

If due to any Change in Law it shall become unlawful or impossible for any Lender (or its Lending Office) to make, maintain or fund its SOFR Rate Revolving Loans, and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon, until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make SOFR Rate Revolving Loans, or to Convert outstanding Revolving Loans into SOFR Rate Revolving Loans, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section 2.16, such Lender shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions applicable to such Lender) to designate a different Lending Office if such designation would avoid the need for giving such notice and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each SOFR Rate Revolving Loan of such Lender then outstanding shall be converted to a Base Rate Revolving Loan either (i) on the last day of the then current Interest Period applicable to such SOFR Rate Revolving Loan if such Lender may lawfully continue to maintain and fund such Revolving Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Revolving Loan to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. (New York City Time) on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c)) to the Lenders for the account of its Lending Office to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder, after any applicable grace period, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.

(c) All computations of interest based on the rate referred to in clause (i) of the definition of the “Base Rate” contained in Section 1.01 shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on Adjusted Term SOFR, the Federal Funds Effective Rate, NYFRB Rate or the rate referred to in clause (iii) of the definition of the “Base Rate” and of commitment fees and LC Fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, commitment fees or LC Fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fees, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of SOFR Rate Revolving Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. Notwithstanding anything to the contrary contained herein, if the Termination Date shall occur on a date other than a Business Day, the Borrower shall repay to the Administrative Agent for the account of each Lender on the next preceding Business Day prior to the Termination Date the aggregate principal amount of the Revolving Loans made to the Borrower by the Lenders then outstanding.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to a Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate.

SECTION 2.18. Taxes.

(a) Defined Terms. For purposes of this Section 2.18 and for the avoidance of doubt, the term “Lender” includes any LC Issuing Bank, and the term “Applicable Law” includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 30 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 30 days after demand therefor, for any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so). Each Lender shall severally indemnify the Administrative Agent and the Borrower, within 30 days after demand therefor, for (i) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(d) relating to the maintenance of a Participant Register and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent or the Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent or the Borrower shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent or the Borrower to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent or the Borrower to the Lender from any other source against any amount due to the Administrative Agent or the Borrower under this subsection (e).

(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.18, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) an executed IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or

(iv) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by an executed IRS Form W-8ECI, IRS Form W-8BEN-E or IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.18 (including by the payment of additional amounts pursuant to this Section 2.18), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(i) Survival. Each party’s obligations under this Section 2.18 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.19. Sharing of Payments, Etc.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its Commitment Percentage thereof as provided herein, then the Lender receiving such greater proportion shall (i) notify the Administrative Agent of such fact, and (ii) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(A) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(B) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment made pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c) or, in respect of SOFR Rate Revolving Loans converted into Base Rate Revolving Loans, pursuant to Section 2.16), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Outstandings to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.15, or the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.18, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.15, or the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18 and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with subsection (a) above, or if any Lender is a Declining Lender, a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or Section 2.18) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment); provided that:

(i)the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

(ii)such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.04(c)) from the assignee (to the extent of such outstanding principal amounts and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iii)in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.18, such assignment will result in a reduction in such compensation or payments thereafter;

(iv)such assignment shall not conflict with Applicable Law;

(v)in the case of any assignment resulting from a Lender becoming a Declining Lender or a Non-Consenting Lender, the applicable assignee shall have consented to the applicable extension, amendment, waiver or consent; and

(vi)No Default shall have occurred and be continuing.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.21. Defaulting Lenders.

(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:

(i)Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in Section 8.01.

(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 6.01 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 8.05 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any LC Issuing Bank hereunder; third, to Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.22; fourth, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order (x) to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) to Cash Collateralize the LC Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.22; sixth, to the payment of any amounts owing to the Lenders or the LC Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the LC Issuing Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Outstandings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Outstandings owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Outstandings are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.21(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.21(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)Certain Fees. (A) No Defaulting Lender shall be entitled to receive any commitment fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive LC Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the LC Outstandings for which it has provided Cash Collateral pursuant to Section 2.22.

(C) With respect to any LC Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such LC Fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in LC Outstandings that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each LC Issuing Bank, as applicable, the amount of any such LC Fee otherwise payable to such Defaulting Lender to the extent allocable to such LC Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such LC Fee.

(iv)Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in LC Outstandings shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) such reallocation does not cause the aggregate Outstanding Credits of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment and (y) such reallocation does not cause the aggregate Outstanding Credits of all Non-Defaulting Lenders to exceed the Commitments of all Non-Defaulting Lenders. Subject to Section 8.16, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v)[Reserved].

(vi)Reduction of Available Commitments. The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 2.08(b).

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and each LC Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in LC Outstandings to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.21(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed in writing by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c) New Letters of Credit. So long as any Lender is a Defaulting Lender, no LC Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

(d) Bankruptcy Event or Bail-In Action of a Parent Company. If (i) a Bankruptcy Event or Bail-In Action with respect to a direct or indirect parent company of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) any LC Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, no LC Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit, unless such LC Issuing Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to such LC Issuing Bank to defease any risk to it in respect of such Lender hereunder.

SECTION 2.22. Cash Collateral.

At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any LC Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.21(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(i) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the LC Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of LC Outstandings, to be applied pursuant to paragraph (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the LC Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(ii) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.22 or Section 2.21 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of LC Outstandings (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(iii) Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce any LC Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.22 following (A) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (B) the determination by the Administrative Agent and each LC Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.21, the Person providing Cash Collateral and each LC Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.

ARTICLE III
CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness.

The obligation of each Lender and each LC Issuing Bank to make the initial Extension of Credit to be made by it hereunder shall become effective on and as of the first date on which the following conditions precedent have been satisfied:

(a)The Administrative Agent shall have received on or before such date of effectiveness the following, each dated such day (except as noted otherwise below), in form and substance reasonably satisfactory to the Administrative Agent and, to the extent requested by the Administrative Agent, in sufficient copies (except with respect to the promissory notes described in paragraph (ii) below) for each Lender and each LC Issuing Bank:

(i) A fully executed version of this Agreement and the other Loan Documents;

(ii)Promissory notes payable to each Lender that has requested the same prior to such date pursuant to Section 2.10(d), duly executed by the Borrower.

(iii)(A) A copy of the articles of incorporation or other organizational documents of the Borrower and each amendment thereto, certified by the Secretary of State of Iowa as being a true and correct copy thereof, and (B) a certificate from the Secretary of State of Iowa (dated not more than 10 days prior to the date hereof) attesting to the continued existence and good standing of the Borrower in that State.

(iv)Certified copies of the resolutions of the board of directors of the Borrower approving this Agreement and the other Loan Documents and of all documents evidencing other necessary corporate action and Governmental Approvals required for the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents.

(v)A certificate of the Secretary or Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered by the Borrower hereunder, and (B) that attached thereto are true and correct copies of the bylaws of the Borrower as in effect on such date.

(vi)A favorable opinion of in-house counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(vii)A favorable opinion of New York counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(b) On such date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated such date, stating that:

(i)The representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the date of such effectiveness as though made on and as of such date, and

(ii)No event has occurred and is continuing that constitutes a Default.

(c) The Borrower shall have paid all accrued fees and expenses under the Existing Credit Agreement payable on the date hereof and all accrued fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders payable on the date hereof (including the accrued fees and expenses of counsel to the Administrative Agent to the extent then due and payable).

(d) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders reasonably in advance of the date hereof.

(e) The Administrative Agent shall have received such other approvals or documents as the Administrative Agent, any Lender or any LC Issuing Bank shall have reasonably requested through the Administrative Agent reasonably in advance of the date hereof.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

The obligation of each Lender and each LC Issuing Bank to make each Extension of Credit to be made by it hereunder (other than in connection with any Borrowing that would not increase the aggregate principal amount of Loans outstanding immediately prior to the making of such Borrowing) shall be subject to the following statements being true on the date of such Borrowing (and each of the giving of the applicable Notice of Borrowing or Request for Issuance and the acceptance by the Borrower of the proceeds of any such Extension of Credit shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(i) The representations and warranties of the Borrower contained in Section 4.01 (other than the representations and warranties in the first sentence of Section 4.01(g), in Section 4.01(i) and in the first sentence of Section 4.01(n)) are true and correct in all material respects (without duplication of any materiality qualifiers) on and as of the date of such Extension of Credit, before and after giving effect to such Extension of Credit and to the application of the proceeds therefrom, as though made on and as of such date, and

(ii) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a)The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Iowa and is duly qualified to do business and is in good standing as a foreign corporation under the laws of each state in which the ownership of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect, and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(b)The execution, delivery and performance by the Borrower of each Loan Document, and the consummation of the transactions contemplated hereby and thereby, are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action. Each Loan Document has been duly executed and delivered by the Borrower.

(d)The execution, delivery and performance by Borrower of the Loan Documents will not (i) violate (A) the articles of incorporation or bylaws (or comparable documents) of Borrower or any of its Material Subsidiaries or (B) any Applicable Law, (ii) be in conflict with, or result in a breach of or constitute a default under, any contract, agreement, indenture or instrument to which the Borrower or any of its Material Subsidiaries is a party or by which any of its or their respective properties is bound or (iii) result in the creation or imposition of any Lien on the property of Borrower or any of its Material Subsidiaries other than Permitted Liens and Liens required under this Agreement, except to the extent such conflict, breach or default referred to in the preceding clause (ii), individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(e)Each Loan Document is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally and by the application of general equitable principles.

(f)The Borrower and each Material Subsidiary are in compliance with all Applicable Laws (including Environmental Laws), except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(g)There is no action, suit, proceeding, claim or dispute pending or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its Material Subsidiaries, or any of its or their respective properties or assets, before any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There is no injunction, writ, preliminary restraining order or any other order of any nature issued by any Governmental Authority directing that any material aspect of the transactions expressly provided for in any of the Loan Documents not be consummated as herein or therein provided.

(h)The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 2021, and the related consolidated statements of income, cash flows and stockholders’ equity for the fiscal year ended on such date, certified by Deloitte & Touche LLP, copies of which have heretofore been furnished to the Administrative Agent and each Lender, present fairly in all material respects the financial condition of the Borrower and its Consolidated Subsidiaries as at such date, and the consolidated results of their operations and cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as may be disclosed therein).

(i)Since December 31, 2021, no event has occurred that could reasonably be expected to have a Material Adverse Effect.

(j)The Borrower and each Material Subsidiary have filed or caused to be filed all U.S. Federal and other material tax returns that are required by Applicable Law to be filed, and have paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property; other than (i) with respect to taxes the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or the applicable Material Subsidiary, as the case may be, or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

(k)No ERISA Event has occurred other than as would not, either individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. There are no actions, suits or claims pending against or involving a Pension Plan (other than routine claims for benefits) or, to the knowledge of the Borrower or any of its ERISA Affiliates, threatened, that would reasonably be expected to be asserted successfully against any Pension Plan and, if so asserted successfully, would reasonably be expected either singly or in the aggregate to have a Material Adverse Effect. No lien imposed under the Internal Revenue Code or ERISA on the assets of the Borrower or any of its ERISA Affiliates exists or is likely to arise with respect to any Pension Plan. The Borrower and each of its Subsidiaries have complied with foreign law applicable to its Foreign Plans, except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(l)The Borrower is not engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of any Loan will be used to extend credit to others for the purpose of buying or carrying any Margin Stock. Following the application of the proceeds of any Extension of Credit, not more than 25% of the value of the assets of the Borrower and the Material Subsidiaries that are subject to the restrictions of Section 5.02(a) or (c) constitute Margin Stock.

(m)Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(n)There are no claims, liabilities, investigations, litigation, notices of violation or liability, administrative proceedings, judgments or orders, whether asserted, pending or threatened, relating to any liability under or compliance with any applicable Environmental Law, against the Borrower or any Material Subsidiary or relating to any real property currently or formerly owned, leased or operated by the Borrower or any Material Subsidiary, that would reasonably be expected to have a Material Adverse Effect. No Hazardous Materials have been or are present or are being spilled, discharged or released on, in, under or from property (real, personal or mixed) currently or formerly owned, leased or operated by the Borrower or any Material Subsidiary in any quantity or manner violating, or resulting in liability under, any applicable Environmental Law, which violation or liability would reasonably be expected to have a Material Adverse Effect.

(o)No written statement or information furnished by or on behalf of the Borrower to the Administrative Agent, any Lender or any LC Issuing Bank in connection with the syndication or negotiation of this Agreement or delivered pursuant hereto, in each case as of the date such statement or information is made or delivered, as applicable, contained or contains, any material misstatement of fact or intentionally omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are, or will be made, not misleading.

(p)Each Material Subsidiary as of the date hereof is set forth on Schedule III.

(q) The Borrower has implemented and maintains in effect policies and procedures designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and, to the knowledge of the Borrower, their respective officers, directors and employees and their respective agents that will act in any capacity in connection with or benefit from the credit facility established hereby, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

ARTICLE V
COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a)Payment of Taxes, Etc. Pay and discharge, and cause each Material Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or its property, and (ii) all lawful claims that, if unpaid, would by Applicable Law become a Lien upon its property, in each case, except to the extent that the failure to pay and discharge such amounts, either singly or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; provided, however, that neither the Borrower nor any Material Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained in accordance with GAAP.

(b)Preservation of Existence, Etc. Preserve and maintain, and cause each Material Subsidiary to preserve and maintain, its corporate, partnership or limited liability company (as the case may be) existence and all rights (charter and statutory) and franchises, except to the extent the failure to maintain such rights and franchises would not reasonably be expected to have a Material Adverse Effect; provided, however, that the Borrower and any Material Subsidiary may consummate any merger or consolidation permitted under Section 5.02(b).

(c)Compliance with Laws, Etc. Comply, and cause each Material Subsidiary to comply, with Applicable Law (with such compliance to include, without limitation, compliance with Environmental Laws, the Patriot Act, Anti-Corruption Laws and Sanctions), except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(d)Inspection Rights. At any reasonable time and from time to time, permit the Administrative Agent, any LC Issuing Bank or any Lender or any designated agents or representatives thereof, at all reasonable times and to the extent permitted by Applicable Law, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Material Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Material Subsidiary with any of their officers or directors and with their independent certified public accountants (at which discussion, if the Borrower or such Material Subsidiary so requests, a representative of the Borrower or such Material Subsidiary shall be permitted to be present, and if such accountants should require that a representative of the Borrower be present, the Borrower agrees to provide a representative to attend such discussion); provided that (i) such designated agents or representatives shall agree to any reasonable confidentiality obligations proposed by the Borrower and shall follow the guidelines and procedures generally imposed upon like visitors to the Borrower’s facilities, and (ii) unless an Event of Default shall have occurred and be continuing, such visits and inspections shall occur not more than once in any fiscal quarter.

(e)Keeping of Books. Keep, and cause each Material Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Material Subsidiary in accordance with GAAP.

(f)Maintenance of Properties, Etc. Maintain and preserve, and cause each Material Subsidiary to maintain and preserve, all of its properties that are material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

(g)Maintenance of Insurance. Maintain, and cause each Material Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which Borrower or any of its Material Subsidiaries operates to the extent available on commercially reasonable terms (the “Industry Standard”); provided, however, that the Borrower and each Material Subsidiary may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice; and provided, further, that if the Industry Standard is such that the insurance coverage then being maintained by Borrower and its Material Subsidiaries is below the Industry Standard, Borrower shall only be required to use its reasonable best efforts to obtain the necessary insurance coverage such that its and its Material Subsidiaries’ insurance coverage equals or is greater than the Industry Standard.

(h)Reporting Requirements. Furnish to the Lenders:

(i) within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as having been prepared in accordance with generally accepted accounting principles and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(ii) within 120 days after the end of each fiscal year of the Borrower, a copy of the annual audit report for such year for the Borrower and its Consolidated Subsidiaries, containing a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other independent public accountants of nationally recognized standing, and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(iii) within five days after the chief financial officer or treasurer of the Borrower obtains knowledge of the occurrence of any Default, a statement of the chief financial officer or treasurer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

(iv)within ten Business Days after the Borrower or any of its ERISA Affiliates knows or has reason to know that (A) the Borrower or any of its ERISA Affiliates has failed to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan, and such noncompliance will, or could reasonably be expected to, result in material liability to the Borrower or its Subsidiaries, and/or (B) any ERISA Event (other than an ERISA Event as defined in clause (vi) of the definition of “ERISA Event”) has occurred, a certificate of the chief financial officer of the Borrower describing such ERISA Event and the action, if any, proposed to be taken with respect to such ERISA Event and a copy of any notice filed with the PBGC or the IRS pertaining to such ERISA Event and all notices received by the Borrower or such ERISA Affiliate from the PBGC or any other governmental agency with respect thereto;

(v) promptly after the commencement thereof, notice of all actions and proceedings before, and orders by, any Governmental Authority affecting the Borrower or any Material Subsidiary of the type described in Section 4.01(g);

(vi) together with the financial statements delivered in paragraphs (i) and (ii) of this Section 5.01(h), if Schedule III shall no longer set forth a complete and correct list of all Material Subsidiaries as of the last date of the period for which such financial statements were prepared, an updated Schedule III setting forth all Material Subsidiaries as of the last date of such period for which such financial statements have been prepared;

(vii)if requested by the Administrative Agent or any Lender, an updated Beneficial Ownership Certification to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, reflecting any change in the information provided in any Beneficial Ownership Certification delivered to the Administrative Agent or any Lender that would result in a change to the list of beneficial owners of the Borrower;

(viii) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence; and

(ix) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

If the financial statements required to be delivered pursuant to Section 5.01(h)(i) or 5.01(h)(ii) are included in any Form 10-K or 10-Q filed by the Borrower, the Borrower’s obligation to deliver such documents or information to the Administrative Agent shall be deemed to be satisfied upon (x) delivery of a copy of the relevant form to the Administrative Agent within the time period required by such Section or (y) the relevant form being available on EDGAR and the delivery of a notice to the Administrative Agent (which notice may be delivered by electronic mail and/or included in the applicable compliance certificate delivered pursuant to Section 5.01(h)(i) or 5.01(h)(ii)) that such form is so available, in each case within the time period required by such Section.

(i) Use of Proceeds. Use the proceeds of the Borrowings and the Letters of Credit for working capital and other general corporate purposes.

SECTION 5.02. Negative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower agrees that it will not:

(a)Liens, Etc. Create or suffer to exist, or cause or permit any Material Subsidiary to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, equity interests held by such Person in any Subsidiary of such Person, whether now owned or hereafter acquired, other than (i) Permitted Liens; (ii) Liens created under Section 2.22 or 6.02; (iii) Liens created by or pursuant to (A) the Mortgage and Deed of Trust, dated as of January 9, 1989, as amended, modified or supplemented, of PacifiCorp, entered into with The Bank of New York Mellon Trust Company, N.A. (as successor trustee to JPMorgan Chase Bank, N.A.), (B) the Indenture, dated as of February 8, 2002, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York), as trustee, (C) the Indenture, dated as of October 1, 2006, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Trust Company, N.A.), as trustee, (D) the Indenture, dated as of September 9, 2013, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A., as trustee, (E) the General and Refunding Mortgage Indenture, dated as of May 1, 2001, as amended, modified or supplemented, between Nevada Power Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, (F) the General and Refunding Mortgage Indenture, dated as of May 1, 2001, as amended, modified or supplemented, between Sierra Pacific Power Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, or (G) any other first mortgage indenture or similar agreement or instrument pursuant to which a Material Subsidiary may issue bonds, notes or similar instruments secured by a lien on all or a substantial portion of its fixed assets, so long as under the terms of such other indenture or similar agreement or instrument no “cross-default” or similar “event of default” (howsoever designated) in respect of any bonds, notes, or other instruments issued thereunder will be triggered by reference to a Default; and (iv) Liens, in addition to the foregoing, securing obligations not greater than the greater of (A) 3.0% of consolidated shareholders’ equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and (B) $100,000,000.

(c)Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or cause or permit any Subsidiary of the Borrower to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except (i) sales in the ordinary course of its business, (ii) dispositions of assets required to be sold to comply with Applicable Laws, (iii) dispositions of short-term, readily marketable investments purchased for cash management purposes with funds not representing the proceeds of other asset sales, (iv) sales, leases, transfers or dispositions of assets to any Person that is not a wholly-owned Subsidiary of the Borrower that in the aggregate during any 12-month period do not exceed 10% of the Consolidated Assets of the Borrower and its Subsidiaries, whether in one transaction or a series of transactions, provided that any such sales, leases, transfers or dispositions will be disregarded for purposes of such 10% limitation (and, for the avoidance of doubt, be deemed to be permitted hereunder) if the net proceeds thereof, within 18 months of such sale, lease, transfer or disposition, as applicable, are (A) used to retire Debt of the Borrower and its Subsidiaries (other than Debt that is subordinated to the Debt hereunder) or (B) invested in assets in similar or related lines of business (including geographic extensions thereof) of the Borrower and its Subsidiaries as of the Closing Date, (v) sales, leases, transfers and dispositions made to the Borrower or a wholly-owned Subsidiary of the Borrower and (vi) a disposition by the Borrower of all or substantially all of its assets to any Person so long as the requirements set forth in Section 5.02(b) are satisfied as if such disposition were a merger or consolidation in which the Borrower is not the surviving entity.

(d)Restrictive Agreements. Enter into, or cause or permit any Material Subsidiary (and intermediate holding companies, if any, between such Material Subsidiary and the Borrower) to enter into, any agreement(or any amendment, supplement or other modification of an existing agreement) after the date hereof, which agreement (or which amendment, supplement or other modification) imposes any restriction (other than restrictions imposed by Applicable Law or Governmental Authorities, and restrictions entered into in connection with the incurrence of Project Finance Debt) on the ability of any Material Subsidiary to make payments, directly or indirectly, to the Borrower, if such restriction has or would reasonably be expected to have a Material Adverse Effect.

(e)Investments. Make, or permit any of its Subsidiaries to make, any Investment in any Person that is not engaged in a line of business that is similar or related to any business (including any geographical extensions thereof) engaged in by the Borrower or any of its Subsidiaries as of the date hereof if (i) such Investment, when combined with all such Investments, would equal or be greater than 15% of the Consolidated Assets of the Borrower and its Subsidiaries, or (ii) a Default has occurred and is continuing or would result from the making of such Investment (determined, for purposes of compliance with Section 5.03, on a pro forma basis as if such payment had been made on the last day of the Borrower’s fiscal quarter then most recently ended and for which financial statements have been delivered pursuant to Section 5.01(h)).

(f)Use of Proceeds. Use the proceeds of any Extension of Credit to buy or carry Margin Stock in violation of the Margin Regulations.

(g)Compliance with Anti-Corruption Laws and Sanctions. The Borrower will not, directly or, to the knowledge of the Borrower, indirectly, use the proceeds of any Borrowing or any Letter of Credit, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, any other party (including each Credit Party) to this Agreement or the other Loan Documents.

SECTION 5.03. Financial Covenant.

So long as any Loan shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital of not greater than 0.700 to 1.00 as of the last day of each fiscal quarter.

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“Events of Default”) shall occur and be continuing:

(a)The Borrower shall fail to pay any principal of any Loan when the same becomes due and payable, or shall fail to pay any interest on any Loan or make any other payment of fees or other amounts payable under this Agreement within five days after the same becomes due and payable, or shall fail to provide Cash Collateral in accordance with Section 2.21(a)(v), 2.22 or 6.02 within five days after the same is required to be provided; or

(b)Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c)(i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(b), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(d)The Borrower or any Material Subsidiary shall fail to pay any principal of or premium or interest on any Debt (other than Debt under this Agreement) that is outstanding in a principal amount in excess of $100,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof; or

(e)Any judgment or order for the payment of money in excess of $100,000,000 to the extent not paid or insured shall be rendered against the Borrower or any Material Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(f)The Borrower or any Material Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any Material Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or

(g)An ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in, or is reasonably likely to result in, a Material Adverse Effect; or

(h)Berkshire Hathaway shall fail to own, directly or indirectly, at least 50% of the issued and outstanding shares of common stock of the Borrower, calculated on a fully diluted basis (a “Change of Control”); provided that, such failure shall not constitute an Event of Default unless and until a Rating Decline has occurred;

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.

If any Event of Default described in Section 6.01(f) with respect to the Borrower shall have occurred and be continuing or the Borrowings shall have otherwise been accelerated or the Commitments terminated pursuant to Section 6.01, then the Administrative Agent may, or shall at the request of the Required Lenders, make demand upon the Borrower to, and forthwith upon such demand (or, in the case of an Event of Default under Section 6.01(f) with respect to the Borrower, automatically without demand) the Borrower will, deposit in an account designated in such demand (the “LC Collateral Account”) with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders and LC Issuing Banks, in same day funds, an amount equal to 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date. If at any time the Administrative Agent determines that any funds held in the LC Collateral Account are subject to any right or claim of any Person other than the Administrative Agent, the Lenders and the LC Issuing Banks or that the total amount of such funds is less than 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the LC Collateral Account, an amount equal to the excess of (i) 103% of such aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date over (ii) the total amount of funds, if any, then held in the LC Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the LC Collateral Account, such funds shall be applied to reimburse the relevant LC Issuing Bank or Lender holding a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank to the extent permitted by Applicable Law.

ARTICLE VII
THE ADMINISTRATIVE AGENT

SECTION 7.01. Appointment and Authority.

Each Lender and each LC Issuing Bank hereby irrevocably appoints MUFG to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuing Banks, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 7.02. Rights as a Lender.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 7.03. Exculpatory Provisions.

(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(iii) shall not, except as expressly set forth herein or in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

(b)The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01, 6.02 and 8.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or an LC Issuing Bank.

(c)The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 7.04. Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of any Lender or an LC Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or such LC Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or such LC Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 7.05. Resignation of Administrative Agent.

(a)The Administrative Agent may at any time give notice of its resignation to the Lenders, the LC Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be (i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the LC Issuing Banks, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b)If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor, which shall be (i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c)With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each LC Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.

Each Lender and LC Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and LC Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

SECTION 7.07. Indemnification.

Each Lender severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower and without limiting its obligation to do so) from and against such Lender’s Commitment Percentage of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Loan Document; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct, as proven in a court of competent jurisdiction by final and nonappealable judgment. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower (and without limiting its obligation to do so) after request therefor. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any amount required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its Commitment Percentage of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s Commitment Percentage of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.07 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 7.08. No Other Duties, etc.

Anything herein to the contrary notwithstanding, none of the Joint Lead Arrangers, the “Joint Bookrunners”, the “Syndication Agents” or the “Documentation Agents” listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any other Loan Document, except in its capacity, as applicable, as the Administrative Agent, a Lender or an LC Issuing Bank hereunder or thereunder.

SECTION 7.09. Erroneous Payments.

(a)If the Administrative Agent notifies a Lender, LC Issuing Bank or Credit Party, or any Person who has received funds on behalf of a Lender, LC Issuing Bank or Credit Party such Lender or LC Issuing Bank (any such Lender, LC Issuing Bank, Credit Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, LC Issuing Bank, Credit Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, LC Issuing Bank or Credit Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

(b)Without limiting immediately preceding clause (a), each Lender, LC Issuing Bank or Credit Party, or any Person who has received funds on behalf of a Lender, LC Issuing Bank or Credit Party such Lender or LC Issuing Bank, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, LC Issuing Bank or Credit Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:

(i)(A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

(ii)such Lender, LC Issuing Bank or Credit Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 7.09(b).

(c)Each Lender, LC Issuing Bank or Credit Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, LC Issuing Bank or Credit Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, LC Issuing Bank or Credit Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.

(d)In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender or LC Issuing Bank that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Lender at any time, (i) such Lender or LC Issuing Bank shall be deemed to have assigned its Loans (but not its Commitments) of the relevant class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to a Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender or LC Issuing Bank shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or LC Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning LC Issuing Bank shall cease to be a Lender or LC Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning LC Issuing Bank and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender or LC Issuing Bank shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or LC Issuing Bank (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or LC Issuing Bank and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender, LC Issuing Bank or Credit Party under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).

(e)The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making a payment or prepayment of the obligations.

(f)To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine

(g)Each party’s obligations, agreements and waivers under this Section 7.09 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or LC Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all obligations (or any portion thereof) under any Loan Document.

ARTICLE VIII
MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

Subject to Section 2.12(c) and Section 2.21(a)(i), no amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that, no amendment, waiver or consent shall, unless in writing and signed by each Lender directly affected thereby (other than, in the case of clause (i) or (v) below, any Defaulting Lender), do any of the following: (i) amend Section 3.01 or 3.02 or waive any of the conditions specified therein, (ii) increase the Commitment of any Lender or extend the Commitments (except pursuant to Section 2.06 or 2.07), (iii) reduce the principal of, or interest on, or rate of interest applicable to, the outstanding Loans or any fees or other amounts payable hereunder, (iv) postpone any date fixed for any payment of principal of, or interest on, the outstanding Loans, reimbursement obligations or any fees or other amounts payable hereunder, (v) change the definition of Required Lenders or change the percentage of the Commitments or of the aggregate unpaid principal amount of the outstanding Borrowings, or the number or the percentage of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, or (vi) amend or waive this Section 8.01 or any provision of this Agreement that requires pro rata treatment of the Lenders; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or any LC Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or such LC Issuing Bank, as the case may be, under this Agreement and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, each LC Issuing Bank and the Required Lenders, amend or waive Section 2.21. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if by the terms of such agreement the Commitment of each Non-Consenting Lender and the obligations of each LC Issuing Bank not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment (but such Non-Consenting Lender or LC Issuing Bank shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04), and such Non-Consenting Lender or LC Issuing Bank shall have received or at the time of such termination receive payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts then payable to it hereunder and under the other Loan Documents.

SECTION 8.02. Notices, Etc.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

(i) if to the Borrower, to it at 666 Grand Avenue, Suite 500, Des Moines, Iowa 50309-2580, Attention: Todd Anliker, Vice President and Treasurer (Facsimile No.: (515) 242-4295; Telephone No.: (515) 281-2454);

(ii) if to the Administrative Agent, to MUFG Bank, Ltd. at 1980 Saturn Street, Monterey Park, CA, 91754, Attention: Gena Robles, (Facsimile: 1-800-446-9951; Telephone No.: (323) 720-2522, Email: gena.robles@unionbank.com and #clo_agency@unionbank.com) with a copy to: Jeffrey Fesenmaier 445 South Figueroa Street, Los Angeles, CA, 90071 (Email: jfesenmaier@us.mufg.jp);

(iii) if to any LC Issuing Bank identified on Schedule II hereto, at the address specified opposite its name on Schedule II hereto, and if to any other LC Issuing Bank, at such address as shall be designated by such LC Issuing Bank in a written notice to the Administrative Agent and the Borrower;

(iv) if to any Initial Lender, at its Lending Office specified opposite its name on Schedule I hereto, and if to any other Lender, at its Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in subsection (b) below, shall be effective as provided in said subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders and the LC Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any LC Issuing Bank pursuant to Section 2.02 or 2.04 if such Lender or such Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d) Platform.

(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the LC Issuing Banks and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).

(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of communications through the Platform except to the extent that such damages are found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Agent Party’s gross negligence or willful misconduct. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or any LC Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.

SECTION 8.03. No Waiver; Remedies.

No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses; Indemnification.

(a)The Borrower agrees to pay promptly upon demand (i) all reasonable out-of-pocket costs and expenses of the Administrative Agent, the Joint Lead Arrangers and their respective Affiliates in connection with the preparation, negotiation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement, and (ii) all reasonable out-of-pocket expenses incurred by any LC Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder. The Borrower further agrees to pay promptly upon demand all reasonable costs and expenses of the Administrative Agent, the Lenders and the LC Issuing Banks, if any, (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, including, without limitation, reasonable fees and expenses of one outside counsel for the Administrative Agent, the Lenders and the LC Issuing Banks taken as a whole in connection with the enforcement of rights under this Section 8.04(a) (and, with respect to matters referred to in clause (A) of this sentence only, separate counsel for the Administrative Agent, any Lender and any LC Issuing Bank to the extent needed to avoid an actual or potential conflict of interest).

(b)The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the Joint Lead Arrangers, each Lender and each LC Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “Indemnified Party”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit, and shall reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party (but if not a party thereto, then only with respect to such proceedings where such Indemnified Party (i) is subject to legal process or other compulsion of law, (ii) believes in good faith that it will be so subject, or (iii) believes in good faith that it is necessary or appropriate for it to resist any legal process or other compulsion of law which is purported to be asserted against it) and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence, bad faith or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against the Administrative Agent, any Lender, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit. This Section 8.04(b) shall not apply with respect to Taxes that are Indemnified Taxes, Excluded Taxes or Taxes that are covered by Section 2.15(a)(ii).

(c)If any payment of principal of, or Conversion of, any SOFR Rate Revolving Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Loan, as a result of a payment or Conversion pursuant to Section 2.06(c), 2.07(c), 2.09, 2.12(b), 2.13, 2.14, 2.15 or 2.16, acceleration of the maturity of the outstanding Borrowings pursuant to Section 6.01, assignment to another Lender upon demand of the Borrower pursuant to Section 2.20(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Loan.

(d)Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.15, 2.16, 2.19 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

(e)The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower or its respective security holders or creditors related to or arising out of or in connection with this Agreement, the Extensions of Credit or the use or proposed use of the proceeds thereof, any of the transactions contemplated by any of the foregoing or in the loan documentation and the performance by an Indemnified Party by any of the foregoing except to the extent that any loss, claim, damage, liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(f)In the event that an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Borrower or any of its Affiliates in which such Indemnified Party is not named as a defendant, the Borrower agrees to reimburse such Indemnified Party for all reasonable expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the fees and disbursements of its legal counsel.

SECTION 8.05. Right of Set-off.

Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the outstanding Borrowings due and payable pursuant to the provisions of Section 6.01, each Lender, each LC Issuing Bank, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender, such LC Issuing Bank or any such Affiliate, to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, such LC Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, such LC Issuing Bank or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or such LC Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the LC Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each LC Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such LC Issuing Bank or their respective Affiliates may have. Each Lender and each LC Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.06. Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each LC Issuing Bank (upon its appointment pursuant to Section 2.04) and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each Lender and each LC Issuing Bank, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the LC Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender or an Affiliate of a Lender; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received written notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender with a Commitment or an Affiliate of such Lender; and

(C) the consent of each LC Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates (except for any Affiliate of Berkshire Hathaway not controlled directly or indirectly by the Borrower that is a commercial lender acquiring rights and obligations under this Agreement in the ordinary course of its business) or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

(vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each LC Issuing Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c)Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments and Termination Date of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, any LC Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person or the Borrower or any of the Borrower’s Affiliates (except for any Affiliate of Berkshire Hathaway not controlled directly or indirectly by the Borrower that is a commercial lender acquiring participations under this Agreement in the ordinary course of its business) or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the LC Issuing Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 7.07 with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 8.01 requiring the consent of each Lender directly affected thereby that directly affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.18 and 8.04(c) (subject to the requirements and limitations therein, including the requirements under Section 2.18(g) (it being understood that the documentation required under Section 2.18(g) shall be delivered to the participating Lender or the applicable Withholding Agent to the extent required by Applicable Law)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20 as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.18, with respect to any participation, than its participating Lender would have been entitled to receive. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.19 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax law. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e)Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central banking authority; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 8.08. Confidentiality.

Neither the Administrative Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (i) to the Administrative Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors, to the Administrative Agent or a Lender and, as contemplated by Section 8.07, to actual or prospective assignees and participants, and then only on a confidential basis, (ii) as required by any law, rule or regulation or judicial process, (iii) to any rating agency when required by it, provided, that, prior to any such disclosure, such rating agency, commercial paper dealer or provider shall undertake to preserve the confidentiality of any Confidential Information received by it from such Lender, (iv) as requested or required by any state, federal or foreign authority or examiner regulating banks, banking or other financial institutions, (v) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement on a confidential basis, (vi) to any credit insurance provider relating to the Borrower and its obligations on a confidential basis and (vii) pursuant to a request or requirement from a regulatory authority (governmental or non-governmental self-regulatory authority) having jurisdiction over a Lender; provided that unless prohibited by Applicable Law, each Lender and the Administrative Agent agree, prior to disclosure thereof, to notify the Borrower of any request for disclosure of any such Confidential Information (x) by any Governmental Authority or representative thereof (other than any such request in connection with an examination of such Lender or the Administrative Agent by such Governmental Authority) or (y) pursuant to legal process.

SECTION 8.09. Governing Law.

EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

SECTION 8.10. Severability.

In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby.

SECTION 8.11. Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic transmission (including by e-mail with a PDF attachment of an executed counterpart) shall be effective as delivery of an original executed counterpart of this Agreement.

SECTION 8.12. Jurisdiction, Etc.

(a) Each party hereto hereby irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any LC Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan in New York City, and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 8.02. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.

SECTION 8.13. Waiver of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) OR THE ACTIONS OF THE ADMINISTRATIVE AGENT, ANY LC ISSUING BANK, THE BORROWER OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER, THE ADMINISTRATIVE AGENT, THE LC ISSUING BANKS AND THE LENDERS HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 8.14. USA Patriot Act.

Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law as of October 26, 2001)) (as amended, restated, modified or otherwise supplemented from time to time, the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act, including, without limitation, the Beneficial Ownership Regulation for the Borrower to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation.

SECTION 8.15. No Fiduciary Duty.

The Credit Parties and their respective Affiliates (collectively, solely for purposes of this Section, the “Lender Parties”), may have economic interests that conflict with those of the Borrower, its securities holders and/or their Affiliates. The Borrower agrees that nothing in the Loan Documents will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender Party, on the one hand, and the Borrower, its securities holders or its Affiliates, on the other hand. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lender Parties, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender Party has assumed an advisory or fiduciary responsibility in favor of the Borrower, its securities holders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender Party has advised, is currently advising or will advise the Borrower, its securities holders or its Affiliates on other matters), and (y) each Lender Party is acting solely as principal hereunder and under the other Loan Documents and not as the agent or fiduciary of the Borrower, its management, securities holders or creditors. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with the transactions contemplated by the Loan Documents or the process leading thereto.

SECTION 8.16. Acknowledgement and Consent to Bail-In of Affected Financial Institutions.

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.

SECTION 8.17. No Novation; Reaffirmation.

The Borrower agrees that this Agreement amends and restates and is substituted for (and is not executed in novation of) the Existing Credit Agreement and that the outstanding obligations of the Borrower under the Existing Credit Agreement (as well as any new obligations incurred on the Closing Date) are now evidenced by this Agreement. All “Loans” and “Borrowings” made and other obligations incurred under (and as defined in) the Existing Credit Agreement which remain outstanding on the Closing Date shall continue as Loans, Borrowings and other obligations under (and shall be governed by the terms of) this Agreement and the other Loan Documents and the Borrower hereby reaffirms all such obligations after giving effect to the amendment and restatement of the Existing Credit Agreement pursuant to this Agreement.

SECTION 8.18. Certain ERISA Matters.

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower, that at least one of the following is and will be true:

(i)such Lender is not using “plan assets” (within the meaning of 29 CFR §2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,

(ii)the transaction exemption set forth in one or more PTEs, such as PTE84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).

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BERKSHIRE HATHAWAY ENERGY COMPANY,
as Borrower

By /s/ Todd Anliker
Todd Anliker
Vice President and Treasurer