Jeffery J. Gust IOWA INDUSTRIAL ENERGY GROUP FALL CONFERENCE Tuesday, October 14, 2014 MidAmerican Energy Company

Introduction Background - Bulk Electric System Reliability of the Bulk Electric System Resiliency of the Bulk Electric System Addressing Reliability and Resiliency Questions Reliability and Resiliency of the Bulk Electric System 2

Eight Regions of NERC 4

North America Electric Power Markets 5

The Federal Regulatory Energy Commission (FERC) has authority for the development, review and enforcement of mandatory reliability and security standards of the bulk electric system. FERC approved the North American Electric Corporation (NERC) as the electric reliability organization to develop mandatory standards and enforce these standards. NERC has delegated the enforcement activity to eight regional entities in North America. Each owner and/or operator of the bulk electric system must register with a region and comply with all of the requirements of the mandatory standards. Any violations of these requirements must be reported up through the region. Violation remedies will range from mitigation plans to civil penalties. Bulk Electric System Reliability 6

Transmission Operations Communications Transmission Planning System Protection and Control Interchange Scheduling and Coordination Resource and Demand Balancing Facilities Design, Connection and Maintenance Modeling, Data and Analysis Emergency Preparedness and Operation Cyber Security Management Controls Electronic Security Perimeters System Security Management Incident Reporting and Response Management Cyber System Recovery Plans Configuration Change Management and Vulnerability Assessment Information Protection Physical Security Categories of Reliability Standards 7

Compliance and Operational Excellence Operational excellence Regulatory integrity Employee commitment Customer service Environmental respect Financial strength

Ability to prepare for and adapt to changing conditions and withstand and recover rapidly from disruptions, including deliberate attacks, accidents or naturally occurring incidents Increasing focus of resilience on emerging hazards versus weather events The growing consensus for regulators: resilience should focus on especially severe events Bulk Electric System Resiliency 9

Natural Hazards – Earthquakes (New Madrid, Cascadia, Hayward, etc.) – Major geomagnetic disturbances – Major storms (Katrina, Sandy) Manmade Threats – Potential adversary nations and terrorist groups – Electromagnetic pulse attack (EMP) – Combined cyber/physical attack Resiliency Threats 10

Protection against major hazards that impact resiliency – More attention to physical and cyber security beyond critical equipment – More drills to practice responding to major events – Better coordination with other critical infrastructure (transportation, communication, local responders, etc.) Regulatory awareness Prudent Investments – Spare equipment – Hardening certain facilities – Improving overall grid transfers Improving Resiliency 11

CIP-014 will become effective late this year Requires owners to complete risk assessment and develop security plans to address vulnerabilities Many comments have indicated the regulation is not enough We expect future changes to regulation that will expand scope MidAmerican is committed to securing our critical facilities FERC Approved New Physical Security Standard 12

Hardening Facilities 13

Improve or enhance perimeter security Improve or enhance surveillance Improve or enhance equipment protection Enhance spare equipment Complete this work as part of our capital investment plan Hardening Critical Facilities 14

MISO Multi-Value Projects 15

Iowa Multi-Value Projects 16

MVP-4 The Iowa Utilities Board approved the franchise for the Black Hawk to Hazleton segment. Construction has begun at substation and line. Structures are assembled and new conductor is being strung. Work is expected to be completed for this segment by December The line segment from Black Hawk to Killdeer is currently under state review. Final route and franchise approval is expected early next year. MVP-3 The Iowa Utilities Board approved all six franchises for the Obrien to Kossuth to Webster segment. Construction has begun near Webster and Kossuth substations. MVP-16 MidAmerican filed for the Certificate of Public Convenience and Necessity pursuant to Section of the Public Utilities Act in Illinois, which would authorize MidAmerican to construct, operate and maintain a double circuit 345 kV line from Oak Grove, IL to Galesburg, IL. The regulatory approval process in Illinois is expected to be completed by August Progress to Date 17