Income Taxes

9 Months Ended

Sep. 30, 2021

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

Income Taxes

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

	Three-Month Periods				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(31)		(20)		(29)		(23)
State income tax, net of federal income tax impacts	(4)		3		—		2
Income tax effect of foreign income	(1)		1		2		—
Effects of ratemaking	(6)		(2)		(5)		(2)
Equity income	—		—		(1)		—
Noncontrolling interest	(1)		—		(2)		—
Other, net	1		—		1		—
Effective income tax rate	(21)	%	3	%	(13)	%	(2)	%

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 nine-month periods ended September 30, 2021 and 2020 totaled $1.2 billion and $1.0 billion, 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, and a deferred income tax charge of $35 million recognized in July 2020 related to the United Kingdom's corporate income tax rate that was scheduled to decrease from 19% to 17% effective April 1, 2020; however, the rate was maintained at 19% through amended legislation enacted in July 2020.

The Company's provision for income taxes has been computed on a stand-alone basis. Berkshire Hathaway includes the Company in its consolidated United States federal and Iowa state income tax returns and the majority of the Company's United States federal income tax is remitted to or received from Berkshire Hathaway. For the nine-month periods ended September 30, 2021 and 2020, the Company received net cash payments for federal income taxes from Berkshire Hathaway totaling $1.3 billion and $1.0 billion, respectively.

PAC

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

Income Taxes

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

	Three-Month Periods				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	4		3		4		3
Federal income tax credits	(20)		(15)		(20)		(12)
Effects of ratemaking	(13)		(4)		(14)		(8)
Other	(1)		1		—		1
Effective income tax rate	(9)	%	6	%	(9)	%	5	%

Income tax credits relate primarily to production tax credits ("PTC") 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.

Effects of ratemaking for the three- and nine-month periods ended September 30, 2021, and 2020 is primarily attributable to activity associated with excess deferred income taxes. Excess deferred income tax amortization, net of deferrals, was $89 million for the nine-month period ended September 30, 2021, including the use of $3 million to amortize certain regulatory asset balances in Wyoming, as compared to $41 million for the nine-month period ended September 30, 2020, including the use of $30 million to accelerate depreciation of certain retired equipment in Oregon. Excess deferred income tax amortization, net of deferrals, was $41 million for the three-month period ended September 30, 2021, as compared to $6 million for the three-month period ended September 30, 2020.

Berkshire Hathaway includes BHE and its subsidiaries in its United States 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 nine-month period ended September 30, 2021 PacifiCorp received net cash payments for federal and state income tax from BHE totaling $109 million. For the nine-month period ended September 30, 2020 PacifiCorp made net cash payments for federal and state income tax to BHE totaling $79 million.

MEC

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

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				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(44)		(55)		(143)		(122)
State income tax, net of federal income tax impacts	(26)		(27)		(27)		(29)
Effects of ratemaking	(12)		(15)		(13)		(13)
Other, net	—		—		—		1
Effective income tax rate	(61)	%	(76)	%	(162)	%	(142)	%

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 three-month periods ended September 30, 2021 and 2020 totaled $103 million and $105 million, respectively, and for the nine-month periods ended September 30, 2021 and 2020 totaled $400 million and $352 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its United States 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. 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. MidAmerican Energy received net cash payments for income tax from BHE totaling $677 million and $500 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

MidAmerican Funding, LLC

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

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				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	(45)		(56)		(150)		(126)
State income tax, net of federal income tax impacts	(27)		(27)		(29)		(30)
Effects of ratemaking	(12)		(16)		(14)		(13)
Other, net	—		—		—		1
Effective income tax rate	(63)	%	(78)	%	(172)	%	(147)	%

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 three-month periods ended September 30, 2021 and 2020 totaled $103 million and $105 million, respectively, and for the nine-month periods ended September 30, 2021 and 2020 totaled $400 million and $352 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its United States 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. The timing of MidAmerican Funding'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. MidAmerican Funding received net cash payments for income tax from BHE totaling $681 million and $504 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

NPC

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

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				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	(10)		—		(10)		—
Effective income tax rate	11	%	21	%	11	%	21	%

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.

SPPC

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

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				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	(10)		(11)		(10)		(10)
Other	—		—		—		(1)
Effective income tax rate	11	%	10	%	11	%	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.

EEGH

Schedule of Effective Income Tax Rate Reconciliation [Line Items]

Income Taxes

Income Taxes

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

	Three-Month Periods				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2021		2020		2021		2020
Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	2		(3)		2		(29)
Equity interest	1		—		1		8
Effects of ratemaking	(1)		(2)		(1)		(6)
Change in tax status	—		(18)		—		(24)
AFUDC-equity	—		—		—		(2)
Noncontrolling interest	(11)		(6)		(11)		(24)
Write-off of regulatory assets	—		—		—		9
Other, net	—		(2)		1		(1)
Effective income tax rate	12	%	(10)	%	13	%	(48)	%

Noncontrolling interest is attributable to Eastern Energy Gas' ownership in Cove Point. The GT&S Transaction resulted in a change of noncontrolling interest to 75% as of September 30, 2021 from 25% as of September 30, 2020. Additionally, Eastern Energy Gas' effective tax rate for the periods ended September 30, 2020 is primarily a function of the impacts associated with the cancellation of the Atlantic Coast Pipeline project, the nominal year-to-date pre-tax income driven by charges associated with the Supply Header Project and the finalization of the effects from the change in tax status of certain Eastern Energy Gas subsidiaries.

Through October 31, 2020, Eastern Energy Gas was included in DEI's consolidated federal income tax return and, where applicable, combined state income tax returns. All affiliate payables or receivables were settled with DEI prior to the closing date of the GT&S Transaction. Subsequent to the GT&S Transaction, Eastern Energy Gas, as a subsidiary of BHE, is included in Berkshire Hathaway's United States federal income tax return. Consistent with established regulatory practice, Eastern Energy Gas' provisions for income tax have been computed on a stand-alone basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. Eastern Energy Gas received net cash payments for income tax from BHE totaling $34 million for the nine-month period ended September 30, 2021.