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Fair Value Measurements (Notes)
 12 Months Ended
Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
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 assets and liabilities recognized on the Consolidated Balance Sheets and measured at fair value on a recurring basis (in millions):
 
Input Levels for Fair Value Measurements
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Other(1)
 
Total
As of December 31, 2018:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
1

 
$
91

 
$
108

 
$
(52
)
 
$
148

Interest rate derivatives
1

 
13

 
10

 
—

 
24

Mortgage loans held for sale
—

 
468

 
—

 
—

 
468

Money market mutual funds(2)
409

 
—

 
—

 
—

 
409

Debt securities:
 
 
 
 
 
 
 
 
 
United States government obligations
187

 
—

 
—

 
—

 
187

International government obligations
—

 
4

 
—

 
—

 
4

Corporate obligations
—

 
46

 
—

 
—

 
46

Municipal obligations
—

 
2

 
—

 
—

 
2

Agency, asset and mortgage-backed obligations
—

 
1

 
—

 
—

 
1

Equity securities:
 
 
 
 
 
 
 
 
 
United States companies
256

 
—

 
—

 
—

 
256

International companies
1,441

 
—

 
—

 
—

 
1,441

Investment funds
128

 
—

 
—

 
—

 
128

 
$
2,423

 
$
625

 
$
118

 
$
(52
)
 
$
3,114

Liabilities:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
(1
)
 
$
(180
)
 
$
(9
)
 
$
111

 
$
(79
)
Interest rate derivatives
—

 
(32
)
 
—

 
—

 
(32
)
 
$
(1
)
 
$
(212
)
 
$
(9
)
 
$
111

 
$
(111
)

As of December 31, 2017:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
1

 
$
42

 
$
104

 
$
(29
)
 
$
118

Interest rate derivatives
—

 
15

 
9

 
—

 
24

Mortgage loans held for sale
—

 
465

 
—

 
—

 
465

Money market mutual funds(2)
685

 
—

 
—

 
—

 
685

Debt securities:
 
 
 
 
 
 
 
 
 
United States government obligations
176

 
—

 
—

 
—

 
176

International government obligations
—

 
5

 
—

 
—

 
5

Corporate obligations
—

 
36

 
—

 
—

 
36

Municipal obligations
—

 
2

 
—

 
—

 
2

Equity securities:
 
 
 
 
 
 
 
 
 
United States companies
288

 
—

 
—

 
—

 
288

International companies
1,968

 
—

 
—

 
—

 
1,968

Investment funds
178

 
—

 
—

 
—

 
178

 
$
3,296

 
$
565

 
$
113

 
$
(29
)
 
$
3,945

Liabilities:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
(3
)
 
$
(167
)
 
$
(10
)
 
$
105

 
$
(75
)
Interest rate derivatives
—

 
(8
)
 
—

 
—

 
(8
)
 
$
(3
)
 
$
(175
)
 
$
(10
)
 
$
105

 
$
(83
)

(1)
Represents netting under master netting arrangements and a net cash collateral receivable of $59 million and $76 million as of December 31, 2018 and 2017, respectively.
(2)
Amounts are included in cash and cash equivalents; other current assets; and noncurrent investments and restricted cash and investments on the Consolidated Balance Sheets. The fair value of these money market mutual funds approximates cost.

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

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

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

The following table reconciles the beginning and ending balances of the Company's assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):
 
Commodity
Derivatives
 
Interest Rate Derivatives
 
Auction Rate
Securities
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
94

 
$
60

 
$
47

 
$
9

 
$
6

 
$
4

 
$
—

 
$
—

 
$
44

Changes included in earnings
1

 
23

 
8

 
181

 
147

 
121

 
—

 
—

 
5

Changes in fair value recognized in OCI
2

 
(3
)
 
(2
)
 
—

 
—

 
—

 
—

 
—

 
8

Changes in fair value recognized in net regulatory assets
3

 
(1
)
 
(11
)
 
—

 
—

 
—

 
—

 
—

 
—

Purchases
3

 
1

 
1

 
—

 
4

 
—

 
—

 
—

 
—

Redemptions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(57
)
Settlements
(4
)
 
14

 
17

 
(180
)
 
(148
)
 
(119
)
 
—

 
—

 
—

Ending balance
$
99

 
$
94

 
$
60

 
$
10

 
$
9

 
$
6

 
$
—

 
$
—

 
$
—



The Company's long-term debt is carried at cost, including fair value adjustments and unamortized premiums, discounts and debt issuance costs as applicable, on the Consolidated Financial Statements. The fair value of the Company's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of the Company's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of the Company's long-term debt as of December 31 (in millions):
 
2018
 
2017
 
Carrying
 
Fair
 
Carrying
 
Fair
 
Value
 
Value
 
Value
 
Value
 
 
 
 
 
 
 
 
Long-term debt
$
36,774

 
$
39,398

 
$
35,193

 
$
40,522
PacifiCorp [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
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 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 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 assets and liabilities recognized on the Consolidated Balance Sheets and measured at fair value on a recurring basis (in millions):
 
Input Levels for Fair Value Measurements
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Other(1)
 
Total
As of December 31, 2018:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
—

 
$
51

 
$
—

 
$
(23
)
 
$
28

Money market mutual funds(2)
69

 
—

 
—

 
—

 
69

Investment funds
24

 
—

 
—

 
—

 
24

 
$
93

 
$
51

 
$
—

 
$
(23
)
 
$
121

 
 
 
 
 
 
 
 
 
 
Liabilities - Commodity derivatives
$
—

 
$
(148
)
 
$
—

 
$
82

 
$
(66
)
 
 
 
 
 
 
 
 
 
 
As of December 31, 2017:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
—

 
$
13

 
$
—

 
$
(4
)
 
$
9

Money market mutual funds (2)
21

 
—

 
—

 
—

 
21

Investment funds
21

 
—

 
—

 
—

 
21

 
$
42

 
$
13

 
$
—

 
$
(4
)
 
$
51

 
 
 
 
 
 
 
 
 
 
Liabilities - Commodity derivatives
$
—

 
$
(117
)
 
$
—

 
$
78

 
$
(39
)

(1)
Represents netting under master netting arrangements and a net cash collateral receivable of $59 million and $74 million as of December 31, 2018 and 2017, respectively.
(2)
Amounts are included in cash and cash equivalents, other current assets and other assets on the Consolidated Balance Sheets. The fair value of these money market mutual funds approximates cost.
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 11 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 and are primarily accounted for as available-for-sale securities. When available, PacifiCorp uses a readily observable quoted market price or net asset value of an identical security in an active market to record the fair value. In the absence of a quoted market price or net asset value of an identical security, the fair value is determined using pricing models or net asset values based on observable market inputs and quoted market prices of securities with similar characteristics.

PacifiCorp's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of PacifiCorp's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of PacifiCorp's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of PacifiCorp's long-term debt as of December 31 (in millions):
 
2018
 
2017
 
Carrying
 
Fair
 
Carrying
 
Fair
 
Value
 
Value
 
Value
 
Value
 
 
 
 
 
 
 
 
Long-term debt
$
7,015

 
$
7,833

 
$
7,005

 
$
8,370
MidAmerican Energy Company [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
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 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 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 assets and liabilities recognized on the Balance Sheets and measured at fair value on a recurring basis (in millions):
 
 
Input Levels for Fair Value Measurements
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Other(1)
 
Total
As of December 31, 2018:
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
Commodity derivatives
 
$
—

 
$
4

 
$
2

 
$
(3
)
 
$
3

Money market mutual funds(2)
 
2

 
—

 
—

 
—

 
2

Debt securities:
 
 
 
 
 
 
 
 
 
 
United States government obligations
 
187

 
—

 
—

 
—

 
187

International government obligations
 
—

 
4

 
—

 
—

 
4

Corporate obligations
 
—

 
46

 
—

 
—

 
46

Municipal obligations
 
—

 
2

 
—

 
—

 
2

Agency, asset and mortgage-backed obligations
 
—

 
1

 
—

 
—

 
1

Equity securities:
 
 
 
 
 
 
 
 
 
 
United States companies
 
256

 
—

 
—

 
—

 
256

International companies
 
6

 
—

 
—

 
—

 
6

Investment funds
 
10

 
—

 
—

 
—

 
10

 
 
$
461

 
$
57

 
$
2

 
$
(3
)
 
$
517

Liabilities:
 
 
 
 
 
 
 
 
 
 
Commodity derivatives
 
$
—

 
$
(4
)
 
$
(2
)
 
$
3

 
$
(3
)
Interest rate derivatives(3)
 
—

 
(19
)
 
—

 
—

 
(19
)
 
 
$
—

 
$
(23
)
 
$
(2
)
 
$
3

 
$
(22
)
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
Commodity derivatives
 
$
—

 
$
3

 
$
4

 
$
(2
)
 
$
5

Money market mutual funds(2)
 
133

 
—

 
—

 
—

 
133

Debt securities:
 
 
 
 
 
 
 
 
 
 
United States government obligations
 
176

 
—

 
—

 
—

 
176

International government obligations
 
—

 
5

 
—

 
—

 
5

Corporate obligations
 
—

 
36

 
—

 
—

 
36

Municipal obligations
 
—

 
2

 
—

 
—

 
2

Equity securities:
 
 
 
 
 
 
 
 
 
 
United States companies
 
288

 
—

 
—

 
—

 
288

International companies
 
7

 
—

 
—

 
—

 
7

Investment funds
 
15

 
—

 
—

 
—

 
15

 
 
$
619

 
$
46

 
$
4

 
$
(2
)
 
$
667

 
 
 
 
 
 
 
 
 
 
 
Liabilities - commodity derivatives
 
$
—

 
$
(9
)
 
$
(1
)
 
$
2

 
$
(8
)

(1)
Represents netting under master netting arrangements and a net cash collateral receivable of $- million as of December 31, 2018 and 2017.
(2)
Amounts are included in cash and cash equivalents and investments and restricted cash and investments on the Balance Sheets. The fair value of these money market mutual funds approximates cost.
(3)
The interest rate derivatives are interest rate locks related to MidAmerican Energy's January 2019 issuance of first mortgage bonds, at which time the interest rate locks were settled for $22 million.

MidAmerican Energy's investments in money market mutual funds and debt and equity securities are stated at fair value, with debt securities primarily 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 assets measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):
 
 
Commodity Derivatives
 
Auction Rate Securities
 
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
3

 
$
(2
)
 
$
(6
)
 
$
—

 
$
—

 
$
26

Transfer to affiliate(1)
 
—

 
—

 
(4
)
 
—

 
—

 
—

Changes included in earnings
 
—

 
—

 
—

 
—

 
—

 
5

Changes in fair value recognized in OCI
 
—

 
—

 
—

 
—

 
—

 
4

Changes in fair value recognized in net regulatory assets
 
(3
)
 
2

 
(6
)
 
—

 
—

 
—

Redemptions
 
—

 
—

 
—

 
—

 
—

 
(35
)
Settlements
 
—

 
3

 
14

 
—

 
—

 
—

Ending balance
 
$
—

 
$
3

 
$
(2
)
 
$
—

 
$
—

 
$
—

(1)
On January 1, 2016, MidAmerican Energy transferred the assets and liabilities of its unregulated retail services business to a subsidiary of BHE.
MidAmerican Energy's long-term debt is carried at cost on the Financial Statements. The fair value of MidAmerican Energy's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of MidAmerican Energy's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of MidAmerican Energy's long-term debt as of December 31 (in millions):
 
2018
 
2017
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
 
 
 
 
 
 
Long-term debt
$
5,381

 
$
5,646

 
$
5,042

 
$
5,686
MidAmerican Funding, LLC and Subsidiaries [Domain]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
Fair Value Measurements

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

MidAmerican Funding's long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of MidAmerican Funding's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of MidAmerican Funding's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of MidAmerican Funding's long-term debt as of December 31 (in millions):
 
2018
 
2017
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
 
 
 
 
 
 
Long-term debt
$
5,621

 
$
5,943

 
$
5,282

 
$
6,006
Nevada Power Company [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
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 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 Nevada Power's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. Nevada Power develops these inputs based on the best information available, including its own data.

The following table presents Nevada Power's assets and liabilities recognized on the Consolidated Balance Sheets and measured at fair value on a recurring basis (in millions):
 
Input Levels for Fair Value Measurements
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2018:
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Commodity derivatives
$
—

 
$
—

 
$
7

 
$
7

Money market mutual funds(1)
104

 
—

 
—

 
104

Investment funds
1

 
—

 
—

 
1

 
$
105

 
$
—

 
$
7

 
$
112

 
 
 
 
 
 
 
 
Liabilities - commodity derivatives
$
—

 
$
—

 
$
(4
)
 
$
(4
)
 
 
 
 
 
 
 
 
As of December 31, 2017:
 
 
 
 
 
 
 
Assets - investment funds
$
2

 
$
—

 
$
—

 
$
2

 
 
 
 
 
 
 
 
Liabilities - commodity derivatives
$
—

 
$
—

 
$
(3
)
 
$
(3
)


(1)
Amounts are included in cash and cash equivalents on the Consolidated Balance Sheets. The fair value of these money market mutual funds approximates cost.

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which Nevada Power transacts. When quoted prices for identical contracts are not available, Nevada Power uses forward price curves. Forward price curves represent Nevada Power's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Nevada Power bases its forward price curves upon internally developed models, with internal and external fundamental data inputs. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to markets that are not active. Given that limited market data exists for these contracts, Nevada Power uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The model incorporates a mid-market pricing convention (the mid‑point price between bid and ask prices) as a practical expedient for valuing its assets and liabilities measured and reported at fair value. The determination of the fair value for derivative contracts not only includes counterparty risk, but also the impact of Nevada Power's nonperformance risk on its liabilities, which as of December 31, 2018, had an immaterial impact to the fair value of its derivative contracts. As such, Nevada Power considers its derivative contracts to be valued using Level 3 inputs.

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

The following table reconciles the beginning and ending balances of Nevada Power's net commodity derivative assets or liabilities measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):
 
 
2018
 
2017
 
2016
Beginning balance
 
$
(3
)
 
$
(14
)
 
$
(22
)
Changes in fair value recognized in regulatory assets or liabilities
 
4

 
(3
)
 
(4
)
Settlements
 
2

 
14

 
12

Ending balance
 
$
3

 
$
(3
)
 
$
(14
)


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 as of December 31 (in millions):
 
2018
 
2017
 
Carrying
 
Fair
 
Carrying
 
Fair
 
Value
 
Value
 
Value
 
Value
 
 
 
 
 
 
 
 
Long-term debt
$
2,353

 
$
2,651

 
$
2,600

 
$
3,088
Sierra Pacific Power Company [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements [Text Block]
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 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 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 Sierra Pacific's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. Sierra Pacific develops these inputs based on the best information available, including its own data.

The following table presents Sierra Pacific's 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
 
Total
As of December 31, 2018:
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Commodity derivatives
$
—

 
$
—

 
$
2

 
$
2

Money market mutual funds(1)
45

 
—

 
—

 
45

 
$
45

 
$
—

 
$
2

 
$
47

 
 
 
 
 
 
 
 
As of December 31, 2017:
 
 
 
 
 
 
 
Assets - investment funds
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 

(1)
Amounts are included in cash and cash equivalents on the Balance Sheets. The fair value of these money market mutual funds approximates cost.

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

Sierra Pacific's long-term debt is carried at cost on the 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 as of December 31 (in millions):
 
2018
 
2017
 
Carrying
 
Fair
 
Carrying
 
Fair
 
Value
 
Value
 
Value
 
Value
 
 
 
 
 
 
 
 
Long-term debt
$
1,120

 
$
1,167

 
$
1,120

 
$
1,221