UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, ~~2015~~2016

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

For the transition period from ~~_____~~______ to ~~_____~~_______

Commission File Number	Exact name of registrant as specified in its charter; State or other jurisdiction of incorporation or organization	IRS ~~Employer~~EmployerIdentification ~~Identification~~ No.
001-14881	BERKSHIRE HATHAWAY ENERGY COMPANY	94-2213782
	(An Iowa Corporation)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580
	515-242-4300
001-05152	PACIFICORP	93-0246090
	(An Oregon Corporation)
	825 N.E. Multnomah Street
	Portland, Oregon 97232
	503-813-5645
333-90553	MIDAMERICAN FUNDING, LLC	47-0819200
	(An Iowa Limited Liability Company)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580
	515-242-4300
333-15387	MIDAMERICAN ENERGY COMPANY	42-1425214
	(An Iowa Corporation)
	666 Grand Avenue, Suite 500
	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
	Securities registered pursuant to Section 12(b) of the Act: None
000-00508	SIERRA PACIFIC POWER COMPANY	88-0044418
	Securities registered pursuant to Section 12(g) of the Act:
	(A Nevada Corporation)
	Common Stock, $1.00 stated value
	6100 Neil Road
	Reno, Nevada 89511
	775-834-4011
	N/A
	(Former name or former address, if changed from last report)

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. ~~Yes T No o~~

~~Indicate~~Registrant byYes ~~check~~No ~~mark~~BERKSHIRE ~~whether~~HATHAWAY ~~the~~ENERGY ~~registrant~~COMPANY ~~has~~X ~~submitted~~PACIFICORP ~~electronically~~X ~~and~~MIDAMERICAN ~~posted on its corporate Web site~~FUNDING, ifLLC ~~any,~~X ~~every~~MIDAMERICAN ~~Interactive~~ENERGY ~~Data~~COMPANY ~~File~~X ~~required~~NEVADA toPOWER beCOMPANY ~~submitted~~X ~~and~~SIERRA ~~posted~~PACIFIC ~~pursuant~~POWER toCOMPANY ~~Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).~~X

~~Yes~~Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T No(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post 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 or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Registrant Large ~~accelerated~~Accelerated ~~filer~~Filer o Accelerated filer o Non-accelerated ~~filer~~Filer x Smaller ~~reporting~~Reporting ~~company~~Company oBERKSHIRE HATHAWAY ENERGY COMPANY X PACIFICORP X MIDAMERICAN FUNDING, LLC X MIDAMERICAN ENERGY COMPANY X NEVADA POWER COMPANY X SIERRA PACIFIC POWER COMPANY X

Indicate by check mark whether the ~~registrant~~registrants isare a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~Yes o No T~~

All shares of outstanding common stock of Nevada Power Company are held by its parent company, NV Energy, Inc., which is an indirect, wholly owned subsidiary of Berkshire Hathaway Energy Company. As of October 31, 2015, 1,000 shares of common stock, $1.00 stated value, were outstanding.Yes o No x

All shares of outstanding common stock of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of October 31, 2016, 77,391,144 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 October 31, 2016, 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 October 31, 2016.

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 October 31, 2016, 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 October 31, 2016, 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 October 31, 2016, 1,000 shares of common stock, $3.75 par value, were outstanding.

This combined Form 10-Q is separately filed by Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company. 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	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Signatures		26
Exhibit Index		27

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	154
Item 4.	Controls and Procedures	154

PART II



Item 1.	Legal Proceedings	155
Item 1A.	Risk Factors	155
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	155
Item 3.	Defaults Upon Senior Securities	155
Item 4.	Mine Safety Disclosures	155
Item 5.	Other Information	155
Item 6.	Exhibits	155
Signatures		156
Exhibit Index		157

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 43, and Part II - Items 1 through 6, the following terms have the definitions indicated.

Nevada Power Company and Related Entities
Berkshire Hathaway Energy Company and Related Entities
Company		Nevada Power Company and its subsidiaries
BHE		Berkshire Hathaway Energy Company
BHE Merger		On December 19, 2013, NV Energy, Inc. became an indirect wholly owned subsidiary of BHE
Berkshire Hathaway Energy or the Company		Berkshire Hathaway Energy Company and its subsidiaries
NV Energy		NV Energy, Inc.
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 Sierra Pacific Power Company
Registrants		Berkshire Hathaway Energy, PacifiCorp, MidAmerican Funding, MidAmerican Energy, Nevada Power and Sierra Pacific
Subsidiary Registrants		PacifiCorp, MidAmerican Funding, MidAmerican Energy, Nevada Power and Sierra Pacific
Northern Powergrid		Northern Powergrid Holdings Company
Northern Natural Gas		Northern Natural Gas Company
Kern River		Kern River Gas Transmission Company
AltaLink		BHE Canada Holdings Corporation
ALP		AltaLink, L.P.
BHE U.S. Transmission		BHE U.S. Transmission, LLC
HomeServices		HomeServices of America, Inc. and its subsidiaries
BHE Pipeline Group or Pipeline Companies		Consists of Northern Natural Gas and Kern River
BHE Transmission		Consists of AltaLink and BHE U.S. Transmission
BHE Renewables		Consists of BHE Renewables, LLC and CalEnergy Philippines
Utilities		PacifiCorp, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company
Berkshire Hathaway		Berkshire Hathaway Inc.
Sierra Pacific		Sierra Pacific Power Company, an electric and natural gas utility wholly owned by NV Energy
Topaz		Topaz Solar Farms LLC
Clark Generating Station		1,103-megawatt generating facility in Nevada
Topaz Project		550-megawatt solar project in California
Goodsprings		5-megawatt waste heat recovery facility in Nevada
Jumbo Road		Jumbo Road Holdings, LLC
Harry Allen Generating Station		628-megawatt generating facility in Nevada
Jumbo Road Project		300-megawatt wind-powered generating facility in Texas
Higgins Generating Station		530-megawatt generating facility in Nevada
Solar Star Funding		Solar Star Funding, LLC
Lenzie Generating Station		1,102-megawatt generating facility in Nevada
Solar Star Projects		A combined 586-megawatt solar project in California
Las Vegas Generating Station		272-megawatt generating facility in Nevada
Navajo Generating Station		2,250-megawatt generating facility in Arizona
Nellis Generating Station		15-megawatt generating facility under construction in Nevada
ON Line		500-kilovolt transmission line connecting the Company and Sierra Pacific
Reid Gardner Generating Station		257-megawatt generating facility in Nevada
Silverhawk Generating Station		520-megawatt generating facility in Nevada
Sun Peak Generating Station		210-megawatt generating facility in Nevada
Certain Industry Terms
AESO		Alberta Electric System Operator
AFUDC		Allowance for Funds Used During Construction
California ISO		California Independent System Operator Corporation
AUC		Alberta Utilities Commission
EEIR		Energy Efficiency Implementation Rate
CPUC		California Public Utilities Commission
EEPR		Energy Efficiency Program Rate
GTA		General Tariff Application
EIM		Energy Imbalance Market
EPA		United States Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
GHG		Greenhouse Gases
GWh		Gigawatt Hours
MW		Megawatts
MWh		Megawatt Hours
PUCN		Public Utilities Commission of Nevada



GWh		Gigawatt Hours
IPUC		Idaho Public Utilities Commission
IUB		Iowa Utilities Board
kV		Kilovolt
MW		Megawatts
MWh		Megawatt Hours
OPUC		Oregon Public Utility Commission
PUCN		Public Utilities Commission of Nevada
REC		Renewable Energy Credit
RPS		Renewable Portfolio Standards
SEC		United States Securities and Exchange Commission
UPSC		Utah Public Service Commission
WPSC		Wyoming Public Service Commission
WUTC		Washington Utilities and Transportation Commission

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 ~~Company~~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 ~~the~~each ~~Company~~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 reliability and safety standards, affecting the ~~Company~~Registrants'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 ~~generating~~ facility output, accelerate ~~generating~~ facility retirements or delay ~~generating~~ facility construction or acquisition;

• the outcome of rate cases and other proceedings conducted by regulatory commissions or other governmental and legal bodies and the ~~Company~~Registrants's ability to recover costs inthrough 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 distributed generation measures and programs, that could affect customer growth and usage, electricity and natural gas supply or the ~~Company~~Registrants's ability to obtain long-term contracts with customers and suppliers;

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

• a high degree of variance between actual and forecasted load or generation that could impact ~~the~~a ~~Company~~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 and creditworthiness of the ~~Company~~Registrants'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 the London Interbank Offered Rate, the base interest rate for the ~~Company~~Registrants's credit ~~facility~~facilities;

• changes in the ~~Company~~Registrant's respective credit ratings;

• 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 Company's ability to recover such costs in rates;

• increases in employee healthcare costs, including the implementation of the Affordable Care Act;

• the impact of investment performance and changes in interest rates, legislation, healthcare cost trends, mortality and morbidity on pension and other postretirement benefits expense and funding requirements related to the Company's participation in NV Energy's benefit plans;

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

iii

• ~~the~~risks ~~impact~~relating ofto ~~new~~nuclear ~~accounting~~generation, ~~guidance~~including orunique ~~changes~~operational, inclosure ~~current accounting estimates~~ and ~~assumptions~~decommissioning ~~on the Company's consolidated financial results~~risks;

• ~~the~~hydroelectric ~~effects~~conditions ~~of catastrophic~~ and ~~other~~the ~~unforeseen events~~cost, ~~which~~feasibility ~~may~~and beeventual ~~caused~~outcome ~~by factors beyond the Company's control or by a breakdown or failure~~ of ~~the~~hydroelectric ~~Company's~~relicensing ~~operating assets, including storms, floods, fires, earthquakes, explosions, landslides, litigation, wars, terrorism and embargoes~~proceedings; ~~and~~

• ~~other~~the ~~business~~impact orof ~~investment~~certain ~~considerations~~contracts ~~that~~used ~~may~~to bemitigate ~~disclosed~~or ~~from~~manage ~~time~~volume, toprice ~~time~~and ininterest ~~the~~rate ~~Company's~~risk, ~~filings~~including ~~with~~increased ~~the~~collateral ~~United~~requirements, ~~States~~and ~~Securities~~changes ~~and~~in ~~Exchange~~commodity ~~Commission~~prices, orinterest inrates and other ~~publicly~~conditions ~~disseminated~~that ~~written~~affect ~~documents.~~the fair value of certain contracts;

~~Further~~• ~~details~~the impact of ~~the~~inflation ~~potential~~on ~~risks~~costs and ~~uncertainties affecting~~ the ~~Company~~ability ~~are~~of ~~described in its filings with~~ the ~~United~~respective ~~States Securities~~Registrants ~~and~~to ~~Exchange~~recover ~~Commission,~~such ~~including~~costs ~~Part II, Item 1A and other discussions contained~~ in ~~this~~regulated Form 10‑Q. The Company 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.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 and changes in interest rates, legislation, healthcare cost trends, mortality and morbidity on pension and other postretirement benefits expense and funding requirements;


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


•	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 consolidated financial results of the respective Registrants;


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


•	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 storms, floods, fires, earthquakes, explosions, landslides, mining accidents, litigation, wars, terrorism, and embargoes; 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		54
Consolidated Balance Sheets		55
Consolidated Statements of Operations		57
Consolidated Statements of Changes in Shareholders' Equity		58
Consolidated Statements of Cash Flows		59
Notes to Consolidated Financial Statements		60
MidAmerican Energy Company
Report of Independent Registered Public Accounting Firm		77
Balance Sheets		78
Statements of Operations		80
Statements of Comprehensive Income		81
Statements of Changes in Equity		82
Statements of Cash Flows		83
Notes to Financial Statements		84
MidAmerican Funding, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm		96
Consolidated Balance Sheets		97
Consolidated Statements of Operations		99
Consolidated Statements of Comprehensive Income		100
Consolidated Statements of Changes in Equity		101
Consolidated Statements of Cash Flows		102
Notes to Consolidated Financial Statements		103
Nevada Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm		118
Consolidated Balance Sheets		119
Consolidated Statements of Operations		120
Consolidated Statements of Changes in Shareholder's Equity		121
Consolidated Statements of Cash Flows		122
Notes to Consolidated Financial Statements		123
Sierra Pacific Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm		136
Consolidated Balance Sheets		137
Consolidated Statements of Operations		138
Consolidated Statements of Changes in Shareholder's Equity		139
Consolidated Statements of Cash Flows		140
Notes to Consolidated Financial Statements		141


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



Berkshire Hathaway Energy Company and its subsidiaries		31
PacifiCorp and its subsidiaries		69
MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company		107
Nevada Power Company and its subsidiaries		130
Sierra Pacific Power Company and its subsidiaries		148

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

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries (the "Company") as of September 30, 2016, and the related consolidated statements of operations and comprehensive income for the three-month and nine-month periods ended September 30, 2016 and 2015, and of changes in equity and cash flows for the nine-month periods ended September 30, 2016 and 2015. These interim financial statements are the responsibility of the Company's management.

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

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries as of December 31, 2015, 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 26, 2016, 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, 2015 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

November 4, 2016

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	September 30,		December 31,
	2016		2015
ASSETS
Current assets:
Cash and cash equivalents	$	1,018	$	1,108
Trade receivables, net	1,852		1,785
Income taxes receivable	53		319
Inventories	926		882
Mortgage loans held for sale	462		335
Other current assets	864		814
Total current assets	5,175		5,243

Property, plant and equipment, net	62,108		60,769
Goodwill	9,085		9,076
Regulatory assets	4,259		4,155
Investments and restricted cash and investments	4,147		3,367
Other assets	1,114		1,008

Total assets	$	85,888	$	83,618

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
	September 30,			December 31,
	2016			2015
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,475		$	1,564
Accrued interest	466			469
Accrued property, income and other taxes	804			372
Accrued employee expenses	355			264
Regulatory liabilities	306			402
Short-term debt	1,886			974
Current portion of long-term debt	1,108			1,148
Other current liabilities	879			896
Total current liabilities	7,279			6,089

Regulatory liabilities	2,788			2,631
BHE senior debt	7,417			7,814
BHE junior subordinated debentures	1,444			2,944
Subsidiary debt	26,234			26,066
Deferred income taxes	13,486			12,685
Other long-term liabilities	2,744			2,854
Total liabilities	61,392			61,083

Commitments and contingencies (Note 12)

Equity:
BHE shareholders' equity:
Common stock - 115 shares authorized, no par value, 77 shares issued and outstanding	—			—
Additional paid-in capital	6,404			6,403
Retained earnings	18,968			16,906
Accumulated other comprehensive loss, net	(1,018		)	(908		)
Total BHE shareholders' equity	24,354			22,401
Noncontrolling interests	142			134
Total equity	24,496			22,535

Total liabilities and equity	$	85,888		$	83,618

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						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015
Operating revenue:
Energy	$	4,272		$	4,324		$	11,102		$	11,787
Real estate	820			745			2,152			1,951
Total operating revenue	5,092			5,069			13,254			13,738

Operating costs and expenses:
Energy:
Cost of sales	1,187			1,354			3,252			3,937
Operating expense	948			903			2,739			2,744
Depreciation and amortization	639			609			1,898			1,794
Real estate	733			667			1,973			1,790
Total operating costs and expenses	3,507			3,533			9,862			10,265

Operating income	1,585			1,536			3,392			3,473

Other income (expense):
Interest expense	(460		)	(475		)	(1,401		)	(1,423		)
Capitalized interest	14			18			128			69
Allowance for equity funds	17			23			147			84
Interest and dividend income	39			27			93			79
Other, net	15			(9		)	26			27
Total other income (expense)	(375		)	(416		)	(1,007		)	(1,164		)

Income before income tax expense and equity income	1,210			1,120			2,385			2,309
Income tax expense	199			269			394			474
Equity income	36			33			96			89
Net income	1,047			884			2,087			1,924
Net income attributable to noncontrolling interests	11			10			25			23
Net income attributable to BHE shareholders	$	1,036		$	874		$	2,062		$	1,901

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						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015

Net income	$	1,047		$	884		$	2,087		$	1,924

Other comprehensive loss, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $7, $7, $26 and $4	18			16			80			10
Foreign currency translation adjustment	(134		)	(318		)	(339		)	(479		)
Unrealized gains (losses) on available-for-sale securities, net of tax of $53, $(69), $89 and $121	80			(103		)	151			179
Unrealized losses on cash flow hedges, net of tax of $(3), $(6), $(1) and $(9)	(3		)	(7		)	(2		)	(13		)
Total other comprehensive loss, net of tax	(39		)	(412		)	(110		)	(303		)

Comprehensive income	1,008			472			1,977			1,621
Comprehensive income attributable to noncontrolling interests	11			10			25			23
Comprehensive income attributable to BHE shareholders	$	997		$	462		$	1,952		$	1,598

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
										Accumulated
				Additional						Other
	Common			Paid-in			Retained			Comprehensive			Noncontrolling			Total
	Shares	Stock		Capital			Earnings			Loss, Net			Interests			Equity

Balance, December 31, 2014	77	$	—	$	6,423		$	14,513		$	(494	)	$	131		$	20,573
Adoption of ASC 853	—	—		—			56			—			11			67
Net income	—	—		—			1,901			—			13			1,914
Other comprehensive loss	—	—		—			—			(303		)	—			(303		)
Distributions	—	—		—			—			—			(15		)	(15		)
Common stock purchases	—	—		(3		)	(33		)	—			—			(36		)
Other equity transactions	—	—		(8		)	—			—			(4		)	(12		)
Balance, September 30, 2015	77	$	—	$	6,412		$	16,437		$	(797	)	$	136		$	22,188

Balance, December 31, 2015	77	$	—	$	6,403		$	16,906		$	(908	)	$	134		$	22,535
Net income	—	—		—			2,062			—			14			2,076
Other comprehensive loss	—	—		—			—			(110		)	—			(110		)
Distributions	—	—		—			—			—			(14		)	(14		)
Other equity transactions	—	—		1			—			—			8			9
Balance, September 30, 2016	77	$	—	$	6,404		$	18,968		$	(1,018	)	$	142		$	24,496

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)



	Nine-Month Periods
	Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	2,087		$	1,924
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	1,922			1,814
Allowance for equity funds	(147		)	(84		)
Equity income, net of distributions	(62		)	(38		)
Changes in regulatory assets and liabilities	41			326
Deferred income taxes and amortization of investment tax credits	546			617
Other, net	(60		)	41
Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets	(348		)	(251		)
Derivative collateral, net	22			8
Pension and other postretirement benefit plans	(73		)	(9		)
Accrued property, income and other taxes	713			1,608
Accounts payable and other liabilities	183			(47		)
Net cash flows from operating activities	4,824			5,909

Cash flows from investing activities:
Capital expenditures	(3,521		)	(4,251		)
Acquisitions, net of cash acquired	(66		)	(157		)
Increase in restricted cash and investments	(48		)	(64		)
Purchases of available-for-sale securities	(98		)	(132		)
Proceeds from sales of available-for-sale securities	125			123
Equity method investments	(462		)	(32		)
Other, net	(47		)	67
Net cash flows from investing activities	(4,117		)	(4,446		)

Cash flows from financing activities:
Repayments of BHE junior subordinated debentures	(1,500		)	(600		)
Common stock purchases	—			(36		)
Proceeds from subsidiary debt	1,484			1,468
Repayments of subsidiary debt	(1,613		)	(712		)
Net proceeds from (repayments of) short-term debt	887			(473		)
Other, net	(50		)	(75		)
Net cash flows from financing activities	(792		)	(428		)

Effect of exchange rate changes	(5		)	(1		)

Net change in cash and cash equivalents	(90		)	1,034
Cash and cash equivalents at beginning of period	1,108			617
Cash and cash equivalents at end of period	$	1,018		$	1,651

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 subsidiaries principally engaged in energy businesses (collectively with its subsidiaries, the "Company"). BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The Company's operations are organized and managed as eight business segments: PacifiCorp, MidAmerican Funding, LLC ("MidAmerican Funding") (which primarily consists of MidAmerican Energy Company ("MidAmerican Energy")), NV Energy, Inc. ("NV Energy") (which primarily consists of Nevada Power Company ("Nevada Power") and Sierra Pacific Power Company ("Sierra Pacific")), Northern Powergrid Holdings Company ("Northern Powergrid") (which primarily consists of Northern Powergrid (Northeast) Limited and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which consists of Northern Natural Gas Company ("Northern Natural Gas") and Kern River Gas Transmission Company ("Kern River")), BHE Transmission (which consists of BHE Canada Holdings Corporation ("AltaLink") (which primarily consists of AltaLink, L.P. ("ALP")) and BHE U.S. Transmission, LLC), BHE Renewables (which primarily consists of BHE Renewables, LLC and CalEnergy Philippines) and HomeServices of America, Inc. (collectively with its subsidiaries, "HomeServices"). The Company, through these businesses, owns four utility companies in the United States serving customers in 11 states, two electricity distribution companies in Great Britain, two interstate natural gas pipeline companies in the United States, an electric transmission business in Canada, interests in electric transmission businesses in the United States, a renewable energy business primarily selling power generated from solar, wind, geothermal and hydroelectric sources under long-term contracts, the second largest residential real estate brokerage firm in the United States and one of the largest residential real estate brokerage franchise networks in the United States.

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 September 30, 2016 and for the three- and nine-month periods ended September 30, 2016 and 2015. The results of operations for the three- and nine-month periods ended September 30, 2016 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, 2015 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 nine-month period ended September 30, 2016.

(2) New Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-15, which amends FASB Accounting Standards Codification ("ASC") Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01, which amends FASB ASC Subtopic 825-10, "Financial Instruments - Overall." The amendments in this guidance address certain aspects of recognition, measurement, presentation and disclosure of financial instruments including a requirement that all investments in equity securities that do not qualify for equity method accounting or result in consolidation of the investee be measured at fair value with changes in fair value recognized in net income. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption not permitted, and is required to be adopted prospectively by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB ASC Topic 606, "Revenue from Contracts with Customers" and supersedes ASC Topic 605, "Revenue Recognition." The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.


(3)	Property, Plant and Equipment, Net

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



		As of
	Depreciable	September 30,			December 31,
	Life	2016			2015
Regulated assets:
Utility generation, transmission and distribution systems	5-80 years	$	70,316		$	69,248
Interstate natural gas pipeline assets	3-80 years	6,866			6,755
		77,182			76,003
Accumulated depreciation and amortization		(23,305		)	(22,682		)
Regulated assets, net		53,877			53,321

Nonregulated assets:
Independent power plants	5-30 years	5,073			4,751
Other assets	3-30 years	983			875
		6,056			5,626
Accumulated depreciation and amortization		(1,000		)	(805		)
Nonregulated assets, net		5,056			4,821

Net operating assets		58,933			58,142
Construction work-in-progress		3,175			2,627
Property, plant and equipment, net		$	62,108		$	60,769

Construction work-in-progress includes $2.6 billion as of September 30, 2016 and $2.3 billion as of December 31, 2015, related to the construction of regulated assets.


(4)	Regulatory Matters

In November 2014, ALP filed a general tariff application ("GTA") asking the Alberta Utilities Commission ("AUC") to approve revenue requirements of C$811 million for 2015 and C$1.0 billion for 2016, primarily due to continued investment in capital projects as directed by the Alberta Electric System Operator. ALP amended the GTA in June 2015 to propose transmission tariff relief measures for customers and modifications to its capital structure. ALP also amended the GTA in October 2015. In May 2016, the AUC issued Decision 3524-D01-2016 pertaining to the 2015-2016 GTA. ALP filed its 2015-2016 GTA compliance filing in July 2016 in response to the AUC's decision. Following the AUC's assessment of whether the refiling complies with the decision, final transmission tariff rates for the 2015 and 2016 test years will be set, subject to further adjustment through the deferral account reconciliation process.

The compliance filing asks the AUC to approve revenue requirements of C$599 million for 2015 and C$685 million for 2016. The decreased revenue requirements requested in the compliance filing, as compared to the original 2015-2016 GTA filing in November 2014, were based on changes to several key components considered in Decision 3524-D01-2016. Among other things, the AUC approved ALP's proposed immediate tariff relief of C$415 million for customers for 2015 and 2016, through (i) the discontinuance of construction work-in-progress ("CWIP") in rate base and the return to allowance for funds used during construction ("AFUDC") accounting effective January 1, 2015, resulting in a C$82 million reduction of revenue requirement and the refund of C$277 million previously collected as CWIP in rate base as part of ALP's transmission tariffs during 2011-2014 less related returns of C$12 million and (ii) a change to the flow through method for calculating income taxes for 2016, resulting in further tariff relief of C$68 million.

In July 2016, ALP also submitted a separate transmission tariff application requesting approval from the AUC to reduce the 2016 interim refundable tariff from C$61 million per month to C$12 million per month for the period August 1, 2016 to December 31, 2016, in alignment with its compliance filing. The AUC approved the reduced 2016 monthly interim refundable tariff amount in August 2016.

Operating revenue for the nine-month period ended September 30, 2016, included a one-time reduction of $200 million from the 2015-2016 GTA decision received in May 2016 at ALP. The decision requires ALP to refund $200 million to customers by the end of 2016 through reduced monthly billings for the change from receiving cash during construction for the return on CWIP in rate base to recording allowance for borrowed and equity funds used during construction related to construction expenditures during the 2011 to 2014 time period. This amount is offset with higher capitalized interest and allowance for equity funds in the Consolidated Statements of Operations. In addition, the decision requires ALP to change to the flow through method of recognizing income tax expense effective January 1, 2016. This change reduced operating revenue by $11 million and $36 million, respectively, for the three- and nine-month periods ended September 30, 2016, with offsetting impacts to income tax expense in the Consolidated Statements of Operations.


(5)	Investments and Restricted Cash and Investments

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



	As of
	September 30,		December 31,
	2016		2015
Investments:
BYD Company Limited common stock	$	1,477	$	1,238
Rabbi trusts	398		380
Other	162		130
Total investments	2,037		1,748

Equity method investments:
Electric Transmission Texas, LLC	647		585
BHE Renewables tax equity investments	635		168
Bridger Coal Company	168		190
Other	157		160
Total equity method investments	1,607		1,103

Restricted cash and investments:
Quad Cities Station nuclear decommissioning trust funds	454		429
Solar Star and Topaz Projects	116		95
Other	161		129
Total restricted cash and investments	731		653

Total investments and restricted cash and investments	$	4,375	$	3,504

Reflected as:
Current assets	$	228	$	137
Noncurrent assets	4,147		3,367
Total investments and restricted cash and investments	$	4,375	$	3,504

Investments

BHE's investment in BYD Company Limited common stock is accounted for as an available-for-sale security with changes in fair value recognized in accumulated other comprehensive income (loss) ("AOCI"). The fair value of BHE's investment in BYD Company Limited common stock reflects a pre-tax unrealized gain of $1.2 billion and $1.0 billion as of September 30, 2016 and December 31, 2015, respectively.


(6)	Recent Financing Transactions

Long-Term Debt

In September and March 2016, BHE repaid at par value a total of $1 billion, plus accrued interest, of its junior subordinated debentures due December 2043, and in June 2016, BHE repaid at par value $500 million, plus accrued interest, of its junior subordinated debentures due December 2044.

In June 2016, Marshall Wind Energy, LLC issued a $95 million Term Loan due June 2026 with principal payments beginning December 2016. The Term Loan has an underlying variable interest rate based on London Interbank Offered Rate ("LIBOR") plus a fixed credit spread with a one-time increase during the term of the loan. The Company has entered into interest rate swaps that fix the underlying interest rate on 100% of the outstanding debt.

In May 2016, ALP issued C$350 million of its 2.747% Series 2016-1 Medium-Term Notes due May 2026. The net proceeds were used to repay short-term debt.

In May 2016, Sierra Pacific issued $205 million of its variable-rate tax-exempt Revenue Bonds due 2029-2036 and $139 million of its 1.25%-3.00% Revenue Bonds due 2029-2036. Sierra Pacific also purchased $125 million of the variable-rate tax-exempt Revenue Bonds due 2029-2036 on their date of issuance to hold for its own account and potential remarketing to the public at a future date. To provide collateral security for its obligations, Sierra Pacific issued its General and Refunding Securities, Series V, Nos. V-1, V-2 and V-3, in the collective amount of $344 million. The collective proceeds from the tax-exempt bond issuances were used in April and May 2016 to refund at par value, plus accrued interest, $349 million of tax-exempt Revenue Bonds due 2029-2036 previously issued on behalf of Sierra Pacific.

In April 2016, Sierra Pacific issued $400 million of its 2.60% General and Refunding Securities, Series U, due May 2026. The net proceeds were used, together with cash on hand, to pay at maturity the $450 million principal amount of 6.00% General and Refunding Securities, Series M, in May 2016.

Credit Facilities

In June 2016, BHE replaced its $1.4 billion and $600 million unsecured revolving credit facilities, which had been set to expire in June 2017, with a $2.0 billion unsecured credit facility with a stated maturity of June 2019 and two one-year extension options subject to bank consent. The credit facility, which is for general corporate purposes and also supports BHE's commercial paper program and provides for the issuance of letters of credit, has a variable interest rate based on the LIBOR or a base rate, at BHE's option, plus a spread that varies based on BHE's senior unsecured long-term debt credit ratings. The credit facility requires that BHE's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.70 to 1.0 as of the last day of each quarter.

In June 2016, PacifiCorp replaced its $600 million unsecured revolving credit facility, which had been set to expire in June 2017, with a $400 million unsecured credit facility with a stated maturity of June 2019 and two one-year extension options subject to bank consent. The credit facility, which supports PacifiCorp's commercial paper program, certain series of its tax-exempt bond obligations and provides for the issuance of letters of credit, has a variable interest rate based on the LIBOR or a base rate, at PacifiCorp's option, plus a spread that varies based on PacifiCorp's credit ratings for its senior unsecured long-term debt securities. The credit facility requires that PacifiCorp's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.65 to 1.0 as of the last day of each quarter. As of September 30, 2016, PacifiCorp had no borrowings outstanding or letters of credit issued under this credit facility.

In March 2016, Solar Star Funding, LLC amended its $320 million letter of credit facility reducing the amount available to $301 million and extending the maturity date to March 2026. As of September 30, 2016, Solar Star Funding, LLC had $284 million of letters of credit issued under this facility.


(7)	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,
	2016		2015		2016		2015

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(16	)	(9	)	(15	)	(11	)
State income tax, net of federal income tax benefit	—		—		—		1
Income tax effect of foreign income	(3	)	(1	)	(4	)	(4	)
Equity income	1		1		1		1
Other, net	(1	)	(2	)	—		(1	)
Effective income tax rate	16	%	24	%	17	%	21	%

Income tax credits relate primarily to production tax credits from wind-powered generating facilities owned by MidAmerican Energy, PacifiCorp and BHE Renewables. Federal renewable electricity production tax credits 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.

Income tax effect of foreign income includes, among other items, deferred income tax benefits of $16 million recognized in September 2016 upon the enactment of a reduction in the United Kingdom corporate income tax rate from 18% to 17% effective April 1, 2020.

Berkshire Hathaway includes the Company in its United States federal income tax return. For the nine-month periods ended September 30, 2016 and 2015, the Company received net cash payments for income taxes from Berkshire Hathaway totaling $860 million and $1.8 billion, respectively.


(8)	Employee Benefit Plans

Domestic Operations

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



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015
Pension:
Service cost	$	7		$	8		$	22		$	24
Interest cost	31			30			94			91
Expected return on plan assets	(39		)	(42		)	(120		)	(127		)
Net amortization	12			13			36			41
Net periodic benefit cost	$	11		$	9		$	32		$	29

Other postretirement:
Service cost	$	2		$	2		$	7		$	8
Interest cost	7			6			23			22
Expected return on plan assets	(10		)	(10		)	(31		)	(33		)
Net amortization	(2		)	(1		)	(9		)	(7		)
Net periodic benefit credit	$	(3	)	$	(3	)	$	(10	)	$	(10	)

Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $77 million and $1 million, respectively, during 2016. As of September 30, 2016, $73 million and $1 million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

Foreign Operations

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



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015

Service cost	$	5		$	6		$	16		$	18
Interest cost	17			20			55			60
Expected return on plan assets	(27		)	(29		)	(85		)	(87		)
Net amortization	11			17			34			49
Net periodic benefit cost	$	6		$	14		$	20		$	40

Employer contributions to the United Kingdom pension plan are expected to be £41 million during 2016. As of September 30, 2016, £31 million, or $44 million, of contributions had been made to the United Kingdom pension plan.

(9) Asset Retirement Obligation

MidAmerican Energy estimates its asset retirement obligation ("ARO") liabilities based upon detailed engineering calculations of the amount and timing of the future cash spending for a third party to perform the required work. Spending estimates are escalated for inflation and then discounted at a credit-adjusted, risk-free rate. Changes in estimates could occur for a number of reasons, including changes in laws and regulations, plan revisions, inflation and changes in the amount and timing of the expected work. During the nine-month period ended September 30, 2016, MidAmerican Energy recorded an increase of $69 million to its ARO liability for the decommissioning of Quad Cities Generating Station Units 1 and 2 as a result of an updated decommissioning study reflecting changes in the estimated amount and timing of cash flow.


(10)	Risk Management and Hedging Activities

The Company is exposed to the impact of market fluctuations in commodity prices, interest rates and foreign currency exchange rates. The Company is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk primarily through BHE's ownership of PacifiCorp, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company (the "Utilities") as they have an obligation to serve retail customer load in their regulated service territories. The Company also provides nonregulated retail electricity and natural gas services in competitive markets. The Utilities' 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, wholesale electricity that is purchased and sold, and natural gas supply for retail customers. 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, future debt issuances and mortgage commitments. Additionally, the Company is exposed to foreign currency exchange rate risk from its business operations and investments in Great Britain and Canada. The Company does not engage in a material amount of proprietary trading activities.

Each of the Company's business platforms has established a risk management process that is designed to identify, assess, manage, mitigate, monitor and report each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, the Company 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. The Company 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, the Company may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, forward sale commitments, or mortgage interest rate lock commitments, to mitigate the Company's exposure to interest rate risk. The Company does not hedge all of its commodity price, interest rate and foreign currency exchange rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in the Company's accounting policies related to derivatives. Refer to Note 11 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 the Company'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):



	Other					Other			Other
	Current			Other		Current			Long-term
	Assets			Assets		Liabilities			Liabilities			Total
As of September 30, 2016
Not designated as hedging contracts:
Commodity assets⁽¹⁾	$	15		$	81	$	11		$	2		$	109
Commodity liabilities⁽¹⁾	(3		)	—		(66		)	(164		)	(233		)
Interest rate assets	12			—		—			—			12
Interest rate liabilities	—			—		(6		)	(14		)	(20		)
Total	24			81		(61		)	(176		)	(132		)

Designated as hedging contracts:
Commodity assets	—			—		1			1			2
Commodity liabilities	—			—		(21		)	(16		)	(37		)
Interest rate assets	—			—		—			—			—
Interest rate liabilities	—			—		(4		)	(7		)	(11		)
Total	—			—		(24		)	(22		)	(46		)

Total derivatives	24			81		(85		)	(198		)	(178		)
Cash collateral receivable	—			—		20			65			85
Total derivatives - net basis	$	24		$	81	$	(65	)	$	(133	)	$	(93	)



	Other					Other			Other
	Current			Other		Current			Long-term
	Assets			Assets		Liabilities			Liabilities			Total
As of December 31, 2015
Not designated as hedging contracts:
Commodity assets⁽¹⁾	$	25		$	72	$	7		$	2		$	106
Commodity liabilities⁽¹⁾	(4		)	—		(113		)	(175		)	(292		)
Interest rate assets	7			—		—			—			7
Interest rate liabilities	—			—		(3		)	(6		)	(9		)
Total	28			72		(109		)	(179		)	(188		)

Designated as hedging contracts:
Commodity assets	—			—		1			2			3
Commodity liabilities	—			—		(33		)	(17		)	(50		)
Interest rate assets	—			3		—			—			3
Interest rate liabilities	—			—		(4		)	(1		)	(5		)
Total	—			3		(36		)	(16		)	(49		)

Total derivatives	28			75		(145		)	(195		)	(237		)
Cash collateral receivable	—			—		40			63			103
Total derivatives - net basis	$	28		$	75	$	(105	)	$	(132	)	$	(134	)

(1)

The Company's commodity derivatives not designated as hedging contracts are generally included in regulated rates, and as of September 30, 2016 and December 31, 2015, a net regulatory asset of $195 million and $250 million, respectively, was recorded related to the net derivative liability of $124 million and $186 million, respectively. The difference between the net regulatory asset and the net derivative liability relates primarily to a power purchase agreement derivative at BHE Renewables.

Not Designated as Hedging Contracts

The following table reconciles the beginning and ending balances of the Company'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						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015

Beginning balance	$	185		$	233		$	250		$	223
Changes in fair value recognized in net regulatory assets	18			47			5			104
Net losses reclassified to operating revenue	(3		)	(11		)	(6		)	(4		)
Net losses reclassified to cost of sales	(5		)	(16		)	(54		)	(70		)
Ending balance	$	195		$	253		$	195		$	253

Designated as Hedging Contracts

The Company uses commodity derivative contracts accounted for as cash flow hedges to hedge electricity and natural gas commodity prices for delivery to nonregulated customers, spring operational sales, natural gas storage and other transactions. Certain commodity derivative contracts have settled and the fair value at the date of settlement remains in AOCI and is recognized in earnings when the forecasted transactions impact earnings. The following table reconciles the beginning and ending balances of the Company's accumulated other comprehensive (income) loss (pre-tax) and summarizes pre-tax gains and losses on commodity derivative contracts designated and qualifying as cash flow hedges recognized in other comprehensive income ("OCI"), as well as amounts reclassified to earnings (in millions):



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015

Beginning balance	$	26		$	38		$	46		$	32
Changes in fair value recognized in OCI	15			20			35			37
Net gains reclassified to operating revenue	1			1			1			4
Net losses reclassified to cost of sales	(7		)	(14		)	(47		)	(28		)
Ending balance	$	35		$	45		$	35		$	45

Realized gains and losses on hedges and hedge ineffectiveness are recognized in income as operating revenue, cost of sales, operating expense or interest expense depending upon the nature of the item being hedged. For the three- and nine-month periods ended September 30, 2016 and 2015, hedge ineffectiveness was insignificant. As of September 30, 2016, the Company had cash flow hedges with expiration dates extending through June 2026 and $24 million of pre-tax unrealized losses are forecasted to be reclassified from AOCI into earnings over the next twelve months as contracts settle.

Derivative Contract Volumes

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



	Unit of	September 30,		December 31,
	Measure	2016		2015
Electricity purchases	Megawatt hours	2		10
Natural gas purchases	Decatherms	321		317
Fuel purchases	Gallons	3		11
Interest rate swaps	US$	730		653
Mortgage sale commitments, net	US$	(375	)	(312	)

Credit Risk

The Utilities are 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 the Utilities' counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, the Utilities analyze the financial condition of each significant wholesale counterparty, establish limits on the amount of unsecured credit to be extended to each counterparty and evaluate the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, the Utilities enter 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, the Utilities exercise rights under these arrangements, including calling on the counterparty's credit support arrangement.

Collateral and Contingent Features

In accordance with industry practice, certain wholesale 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 three recognized credit rating agencies. These derivative contracts 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," or in some cases terminate the contract, in the event of a material adverse change in creditworthiness. These rights can vary by contract and by counterparty. As of September 30, 2016, the applicable credit ratings from the three recognized credit rating agencies were investment grade.

The aggregate fair value of the Company's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $227 million and $288 million as of September 30, 2016 and December 31, 2015, respectively, for which the Company had posted collateral of $73 million and $75 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 September 30, 2016 and December 31, 2015, the Company would have been required to post $139 million and $198 million, respectively, of additional collateral. The Company's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation, or other factors.


(11)	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 September 30, 2016
Assets:
Commodity derivatives	$	1		$	22		$	88		$	(18	)	$	93
Interest rate derivatives	—			1			11			—			12
Mortgage loans held for sale	—			443			—			—			443
Money market mutual funds⁽²⁾	557			—			—			—			557
Debt securities:
United States government obligations	156			—			—			—			156
International government obligations	—			3			—			—			3
Corporate obligations	—			36			—			—			36
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			2			—			—			2
Auction rate securities	—			—			18			—			18
Equity securities:
United States companies	249			—			—			—			249
International companies	1,483			—			—			—			1,483
Investment funds	174			—			—			—			174
	$	2,620		$	509		$	117		$	(18	)	$	3,228
Liabilities:
Commodity derivatives	$	(4	)	$	(234	)	$	(32	)	$	103		$	(167	)
Interest rate derivatives	(1		)	(30		)	—			—			(31		)
	$	(5	)	$	(264	)	$	(32	)	$	103		$	(198	)



As of December 31, 2015
Assets:
Commodity derivatives	$	—		$	16		$	93		$	(16	)	$	93
Interest rate derivatives	—			5			5			—			10
Mortgage loans held for sale	—			327			—			—			327
Money market mutual funds⁽²⁾	421			—			—			—			421
Debt securities:
United States government obligations	133			—			—			—			133
International government obligations	—			2			—			—			2
Corporate obligations	—			39			—			—			39
Municipal obligations	—			1			—			—			1
Agency, asset and mortgage-backed obligations	—			3			—			—			3
Auction rate securities	—			—			44			—			44
Equity securities:
United States companies	239			—			—			—			239
International companies	1,244			—			—			—			1,244
Investment funds	136			—			—			—			136
	$	2,173		$	393		$	142		$	(16	)	$	2,692
Liabilities:
Commodity derivatives	$	(13	)	$	(283	)	$	(46	)	$	119		$	(223	)
Interest rate derivatives	—			(13		)	(1		)	—			(14		)
	$	(13	)	$	(296	)	$	(47	)	$	119		$	(237	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $85 million and $103 million as of September 30, 2016 and December 31, 2015, 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. Refer to Note 10 for further discussion regarding the Company's risk management and hedging activities.

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 and are 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 fair value of the Company's investments in auction rate securities, where there is no current liquid market, is determined using pricing models based on available observable market data and the Company's judgment about the assumptions, including liquidity and nonperformance risks, which market participants would use when pricing the asset.

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 (in millions):



	Three-Month Periods								Nine-Month Periods
	Ended September 30,								Ended September 30,
				Interest			Auction					Interest			Auction
	Commodity			Rate			Rate		Commodity			Rate			Rate
	Derivatives			Derivatives			Securities		Derivatives			Derivatives			Securities
2016:
Beginning balance	$	44		$	14		$	18	$	47		$	4		$	44
Changes included in earnings	9			49			—		8			103			—
Changes in fair value recognized in OCI	(2		)	—			—		(2		)	—			6
Changes in fair value recognized in net regulatory assets	(1		)	—			—		(12		)	—			—
Purchases	1			—			—		1			—			—
Redemptions	—			—			—		—			—			(32		)
Settlements	5			(52		)	—		14			(96		)	—
Ending balance	$	56		$	11		$	18	$	56		$	11		$	18



	Three-Month Periods									Nine-Month Periods
	Ended September 30,									Ended September 30,
				Interest			Auction						Interest			Auction
	Commodity			Rate			Rate			Commodity			Rate			Rate
	Derivatives			Derivatives			Securities			Derivatives			Derivatives			Securities
2015:
Beginning balance	$	34		$	5		$	45		$	51		$	—		$	45
Changes included in earnings	6			25			—			17			70			—
Changes in fair value recognized in OCI	(2		)	—			(1		)	(5		)	—			(1		)
Changes in fair value recognized in net regulatory assets	(4		)	—			—			(21		)	—			—
Purchases	—			—			—			1			—			—
Settlements	9			(23		)	—			—			(66		)	—
Transfers from Level 2	—			—			—			—			3			—
Ending balance	$	43		$	7		$	44		$	43		$	7		$	44

The Company's long-term debt is carried at cost 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 September 30, 2016				As of December 31, 2015
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	36,203	$	42,970	$	37,972	$	41,785


(12)	Commitments and Contingencies

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.

USA Power

In October 2005, prior to BHE's ownership of PacifiCorp, PacifiCorp was added as a defendant to a lawsuit originally filed in February 2005 in the Third District Court of Salt Lake County, Utah ("Third District Court") by USA Power, LLC, USA Power Partners, LLC and Spring Canyon Energy, LLC (collectively, the "Plaintiff"). The Plaintiff's complaint alleged that PacifiCorp misappropriated confidential proprietary information in violation of Utah's Uniform Trade Secrets Act and accused PacifiCorp of breach of contract and related claims in regard to the Plaintiff's 2002 and 2003 proposals to build a natural gas-fueled generating facility in Juab County, Utah. In October 2007, the Third District Court granted PacifiCorp's motion for summary judgment on all counts and dismissed the Plaintiff's claims in their entirety. In a May 2010 ruling on the Plaintiff's petition for reconsideration, the Utah Supreme Court reversed summary judgment and remanded the case back to the Third District Court for further consideration. In May 2012, a jury awarded damages to the Plaintiff for breach of contract and misappropriation of a trade secret in the amounts of $18 million for actual damages and $113 million for unjust enrichment. After considering various motions filed by the parties to expand or limit damages, interest and attorney's fees, in May 2013, the court entered a final judgment against PacifiCorp in the amount of $115 million, which includes the $113 million of aggregate damages previously awarded and amounts awarded for the Plaintiff's attorneys' fees. The final judgment also ordered that postjudgment interest accrue beginning as of the date of the April 2013 initial judgment. In May 2013, PacifiCorp posted a surety bond issued by a subsidiary of Berkshire Hathaway to secure its estimated obligation. Both PacifiCorp and the Plaintiff filed appeals with the Utah Supreme Court. The Utah Supreme Court affirmed the district court's decision and denied the issues appealed by all parties. In May 2016, PacifiCorp paid $123 million for the final judgment and postjudgment interest.

Environmental Laws and Regulations

The Company is subject to federal, state, local and foreign 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 the Company's current and future operations. The Company believes it is in material compliance with all applicable laws and regulations.

Hydroelectric Relicensing

PacifiCorp's Klamath hydroelectric system is currently operating under annual licenses with the Federal Energy Regulatory Commission ("FERC"). In February 2010, PacifiCorp, the United States Department of the Interior, the United States Department of Commerce, the state of California, the state of Oregon and various other governmental and non-governmental settlement parties signed the Klamath Hydroelectric Settlement Agreement ("KHSA"). Among other things, the KHSA provided that the United States Department of the Interior would conduct scientific and engineering studies to assess whether removal of the Klamath hydroelectric system's mainstem dams was in the public interest and would advance restoration of the Klamath Basin's salmonid fisheries. If it was determined that dam removal should proceed, dam removal would have begun no earlier than 2020.

Under the KHSA, PacifiCorp and its customers were protected from uncapped dam removal costs and liabilities. For dam removal to occur, federal legislation consistent with the KHSA was required to provide, among other things, protection for PacifiCorp from all liabilities associated with dam removal activities. As of December 31, 2015, no federal legislation had been enacted, and several parties to the KHSA initiated a dispute resolution process.

In February 2016, the principal parties to the KHSA (PacifiCorp, the states of California and Oregon and the United States Departments of the Interior and Commerce) executed an agreement in principle committing to explore potential amendment of the KHSA to facilitate removal of the Klamath dams through a FERC process without the need for federal legislation. Since that time, PacifiCorp, the states of California and Oregon, and the United States Departments of the Interior and Commerce have negotiated an amendment to the KHSA that was signed on April 6, 2016. Consistent with the terms of the amended KHSA, on September 23, 2016, PacifiCorp and the Klamath River Renewal Corporation ("KRRC") jointly filed an application with the FERC to transfer the license for the four mainstem Klamath River hydroelectric generating facilities from PacifiCorp to the KRRC. Also on September 23, 2016, the KRRC filed an application with the FERC to surrender the license and decommission the facilities, but the application included a request for the FERC to refrain from acting on the surrender application until after the transfer of the license to the KRRC is effective.

Under the amended KHSA, the KRRC must indemnify PacifiCorp from liabilities associated with dam removal. The amended KHSA also limits PacifiCorp's contribution to facilities removal costs to no more than $200 million, of which up to $184 million would be collected from PacifiCorp's Oregon customers with the remainder to be collected from PacifiCorp's California customers. California voters approved a water bond measure in November 2014 from which the state of California's contribution toward facilities removal costs will be drawn. In accordance with this bond measure, additional funding of up to $250 million for facilities removal costs was included in the California state budget in 2016, with the funding effective for at least five years. If facilities removal costs exceed the combined funding that will be available from PacifiCorp's Oregon and California customers and the state of California, sufficient funds would need to be provided by the KRRC or an entity other than PacifiCorp in order for facilities removal to proceed.

If certain conditions in the amended KHSA are not satisfied and the license does not transfer to the KRRC, PacifiCorp will resume relicensing with the FERC.

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.


(13)	Components of Other Comprehensive Income (Loss), Net

The following table shows the change in AOCI attributable to BHE shareholders by each component of OCI, net of applicable income taxes (in millions):



							Unrealized
	Unrecognized			Foreign			Gains on		Unrealized			AOCI
	Amounts on			Currency			Available-		(Losses) Gains			Attributable
	Retirement			Translation			For-Sale		on Cash			To BHE
	Benefits			Adjustment			Securities		Flow Hedges			Shareholders, Net

Balance, December 31, 2014	$	(490	)	$	(412	)	$	390	$	18		$	(494	)
Other comprehensive income (loss)	10			(479		)	179		(13		)	(303		)
Balance, September 30, 2015	$	(480	)	$	(891	)	$	569	$	5		$	(797	)

Balance, December 31, 2015	$	(438	)	$	(1,092	)	$	615	$	7		$	(908	)
Other comprehensive income (loss)	80			(339		)	151		(2		)	(110		)
Balance, September 30, 2016	$	(358	)	$	(1,431	)	$	766	$	5		$	(1,018	)

Reclassifications from AOCI to net income for the periods ended September 30, 2016 and 2015 were insignificant. For information regarding cash flow hedge reclassifications from AOCI to net income in their entirety, refer to Note 10. Additionally, refer to the "Foreign Operations" discussion in Note 8 for information about unrecognized amounts on retirement benefits reclassifications from AOCI that do not impact net income in their entirety.


(14)	Segment Information

The Company's reportable segments with foreign operations include Northern Powergrid, whose business is principally in the United Kingdom, BHE Transmission, whose business includes operations in Canada, and BHE Renewables, whose business includes operations in the Philippines. Intersegment eliminations and adjustments, including the allocation of goodwill, have been made. Effective January 1, 2016, MidAmerican Energy transferred the assets and liabilities of its unregulated retail services business to MidAmerican Energy Services, LLC, a subsidiary of BHE. Prior period amounts have been changed to reflect this activity in BHE and Other. Information related to the Company's reportable segments is shown below (in millions):



	Three-Month Periods					Nine-Month Periods
	Ended September 30,					Ended September 30,
	2016		2015			2016		2015
Operating revenue:
PacifiCorp	$	1,434	$	1,423		$	3,919	$	3,942
MidAmerican Funding	797		681			2,008		1,984
NV Energy	987		1,124			2,309		2,665
Northern Powergrid	220		265			748		852
BHE Pipeline Group	201		196			704		736
BHE Transmission⁽¹⁾	169		153			309		428
BHE Renewables	273		269			582		583
HomeServices	820		745			2,152		1,951
BHE and Other⁽²⁾	191		213			523		597
Total operating revenue	$	5,092	$	5,069		$	13,254	$	13,738

Depreciation and amortization:
PacifiCorp	$	193	$	194		$	589	$	584
MidAmerican Funding	118		101			338		300
NV Energy	106		103			315		307
Northern Powergrid	49		50			149		148
BHE Pipeline Group	53		51			160		151
BHE Transmission	61		56			177		147
BHE Renewables	57		55			169		160
HomeServices	9		8			24		20
BHE and Other⁽²⁾	2		(1		)	1		(3		)
Total depreciation and amortization	$	648	$	617		$	1,922	$	1,814



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2016			2015			2016			2015
Operating income:
PacifiCorp	$	445		$	437		$	1,108		$	1,037
MidAmerican Funding	284			209			524			422
NV Energy	394			398			656			697
Northern Powergrid	90			129			373			452
BHE Pipeline Group	68			66			320			322
BHE Transmission⁽¹⁾	81			62			35			166
BHE Renewables	157			153			233			225
HomeServices	87			78			179			161
BHE and Other⁽²⁾	(21		)	4			(36		)	(9		)
Total operating income	1,585			1,536			3,392			3,473
Interest expense	(460		)	(475		)	(1,401		)	(1,423		)
Capitalized interest⁽¹⁾	14			18			128			69
Allowance for equity funds⁽¹⁾	17			23			147			84
Interest and dividend income	39			27			93			79
Other, net	15			(9		)	26			27
Total income before income tax expense and equity income	$	1,210		$	1,120		$	2,385		$	2,309



Interest expense:
PacifiCorp	$	95	$	97	$	286	$	287
MidAmerican Funding	55		50		164		150
NV Energy	60		67		190		195
Northern Powergrid	33		37		105		108
BHE Pipeline Group	13		16		39		51
BHE Transmission	40		37		114		110
BHE Renewables	51		49		148		144
HomeServices	1		1		2		3
BHE and Other⁽²⁾	112		121		353		375
Total interest expense	$	460	$	475	$	1,401	$	1,423



Operating revenue by country:
United States	$	4,697	$	4,643	$	12,185	$	12,444
United Kingdom	220		265		748		852
Canada⁽¹⁾	170		154		313		434
Philippines and other	5		7		8		8
Total operating revenue by country	$	5,092	$	5,069	$	13,254	$	13,738



Income before income tax expense and equity income by country:
United States	$	1,089	$	962	$	1,945	$	1,785
United Kingdom	74		98		284		364
Canada	43		41		114		119
Philippines and other	4		19		42		41
Total income before income tax expense and equity income by country	$	1,210	$	1,120	$	2,385	$	2,309



	As of
	September 30,		December 31,
	2016		2015
Total assets:
PacifiCorp	$	23,557	$	23,550
MidAmerican Funding	17,199		16,315
NV Energy	14,424		14,656
Northern Powergrid	6,727		7,317
BHE Pipeline Group	5,115		4,953
BHE Transmission	8,493		7,553
BHE Renewables	6,775		5,892
HomeServices	1,947		1,705
BHE and Other⁽²⁾	1,651		1,677
Total assets	$	85,888	$	83,618


(1)	Refer to Note 4 for information regarding certain regulatory matters impacting AltaLink's financial results for the three- and nine-month periods ended September 30, 2016.


(2)	The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other, relate principally to other entities, corporate functions and intersegment eliminations.

The following table shows the change in the carrying amount of goodwill by reportable segment for the nine-month period ended September 30, 2016 (in millions):



										BHE									BHE
			MidAmerican		NV		Northern			Pipeline			BHE		BHE		Home-		and
	PacifiCorp		Funding		Energy		Powergrid			Group			Transmission		Renewables		Services		Other			Total

December 31, 2015	$	1,129	$	2,102	$	2,369	$	1,056		$	101		$	1,428	$	95	$	794	$	2		$	9,076
Acquisitions	—		—		—		—			—			4		—		41		1			46
Foreign currency translation	—		—		—		(92		)	—			77		—		—		(3		)	(18		)
Other	—		—		—		—			(19		)	—		—		—		—			(19		)
September 30, 2016	$	1,129	$	2,102	$	2,369	$	964		$	82		$	1,509	$	95	$	835	$	—		$	9,085


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 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.

The Company's operations are organized and managed 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) Limited and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which consists of Northern Natural Gas and Kern River), BHE Transmission (which consists of AltaLink and BHE U.S. Transmission), BHE Renewables and HomeServices. BHE, through these businesses, owns four utility companies in the United States serving customers in 11 states, two electricity distribution companies in Great Britain, two interstate natural gas pipeline companies in the United States, an electric transmission business in Canada, interests in electric transmission businesses in the United States, a renewable energy business primarily selling power generated from solar, wind, geothermal and hydroelectric sources under long-term contracts, the second largest residential real estate brokerage firm in the United States and one of the largest residential real estate brokerage franchise networks in the United States. 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, corporate functions and intersegment eliminations. Effective January 1, 2016, MidAmerican Energy transferred the assets and liabilities of its unregulated retail services business to MidAmerican Energy Services, LLC, a subsidiary of BHE. Prior period amounts have been changed to reflect this activity in

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