1. Southern California Energy Summit Palm Springs, California October 4, 2013 Jonathan M. Weisgall Vice President, Legislative and Regulatory Affairs MidAmerican Energy Holdings Company

2. THE FUTURE OF CLEAN ENERGY & THE STATE OF THE INDUSTRY 2

3. Plants – Aging (Brattle Group: $2.0t investment over next 20 years) – EPA requirements (GHG, coal ash, water restrictions) – Pressure to change resource mix Flat to declining sales of electricity New technologies: smart grid; electric vehicles Move from centralized power to distributed generation Huge risk to utilities – customer as generator Eroding customer base and rate base Force utilities to spread fixed costs onto fewer customers Spiral effect? Increase rates further  accelerate the shift to distributed energy? Industry: utilities under great pressure to change 3

4. May not reward utilities for desired behavior Lack of incentives for: – Clean energy investments – Energy efficiency – Innovation Rate structures need revision Adversarial, judicial-like process; hard for regulators to communicate well with stakeholders Orientation is toward the utility as seller of a commodity, not a service Can regulation handle these changes? 4

5. Growth in electricity use expected to slow 5

6. U.S. oil and natural gas policy for the last 40 years has been based on: – Resource scarcity – Growing demand Both assumptions have changed recently – Huge new shale gas/oil supplies (10-3-13 Wall Street Journal lead: “U.S. Rises to No. 1 Energy Producer”) – U.S. 2011 electricity demand 2007-2012: virtually unchanged; why? Impact of slow economy Distributed generation (solar roofs) Energy efficiency Changes in assumptions 6

7. Goals: – Reliability – Affordability – Sustainability How to accomplish, given tensions among them? How to de-risk them? How to accomplish these goals in light of: – Flat to lower growth? – Pressure from low natural gas prices? – Growing pressure for lower greenhouse gas emissions? Electricity market challenges 7

8. No price on carbon, but utilities act like there is one Renewables (and nuclear) need a price or penalty on carbon emissions in order to grow Renewable integration costs and variable resources Minimal growth vs. RPS, transmission, EPA rules Natural gas: – Flexible; peaker; complements renewables; easier to integrate – Will low prices continue? Volatility? Crowd out renewables? Coal: Not CA issue, but 35-50 GW being retired – Coal 45% of electricity mix in 2011; 38% in 2012 – Natural gas: 25% in 2011; 31% in 2012 Uncertainties in the market 8

9. Renewable barriers – Boom-bust cycle of tax incentives (PTC) – Transmission delays – planning, permitting, pricing – Low natural gas prices Policy drivers – which will continue? – Tax policies: PTC; ITC; MLP; state tax policies; or comprehensive tax reform? – Investment policies – government loan guarantees – Mandates: 29 state with RPS programs – and bills in 14 states to water down or repeal them all rejected – EPA regulations of coal plants Uncertainty – renewables 9

10. MidAmerican Regulated Wind Resources MidAmerican Energy Company In-service – 2,284.8 MW 1999 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total PacifiCorp MidAmerican Energy 32.1 - 100.5 140.4 381.7 265.5 111.0 - 1,031.2 $2.1 - 160.5 200.0 99.0 201.5 623.3 - 593.4 407.1 2,284.8 $3.9 32.1 160.5 200.0 199.5 341.9 1,005.0 265.5 111.0 593.4 407.1 3,316.0 $6.0 Investment (billions) Owned Wind Generation (MW) PacifiCorp In-service at acquisition date – 32.1 MW In-service since acquisition – 999.1 MW – 9% of total owned generation capacity – In addition, 896 MW contracted through purchased power agreements – 200 megawatts planned 2020-2023 – 29% of total owned generation capacity – In addition, 109 MW contracted through purchased power agreements 10 Total

11. Wind resources approved by our regulators as just and reasonable – 31% wind today for MEC Iowa: Rates frozen 1995-2013 Just commenced rate case (environmental) May 2013: Announced plans for additional 1,050 megawatts in Iowa ($1.9 billion investment) – Largest economic development project in Iowa history – > $360 mm in property tax revenues over 30 years – Landowner payments of > $3 million per year Rate reduction – starting at $3.3 mm in 2015, up to $10 mm/year by 2017 Completion by 12/31/15 (39% wind) Renewable energy myths – cost 11

13. Western U.S.: 37 Fiefdoms REDM Beaumaris Castle, Wales

14. PacifiCorp MOU with CAISO to explore EIM (regional real-time market service): – Balances supply and demand every five minutes by choosing least-cost resource to meet grid’s needs – Accesses a wider portfolio of resources – Leverages geographical and resource diversity – Results: Saves costs for customers Enhances reliability Optimizes integration of renewable energy Makes highly efficient use of transmission lines – Good news for customers, renewables, reliability and oversupply challenges Energy imbalance market 14

15. 50% RPS? – How to achieve? – Greater regional cooperation/collaboration (EIM)? – Transmission policy? SONGS/once-through cooling replacements – Natural gas? Renewables? Both? – Impact on greenhouse gas emissions? – Impact on cost? – Transmission implications? State already about 62% dependent on natural gas – Eggs in one basket? Future of baseload power? California challenges – other panels 15

16. Mood: rancid House Republicans: Who are they? – About half: <3 years (72 freshmen from 2010) – Motivations? 1990’s and 2000’s – driven by national security concerns Drivers now: debt, deficit, anger at Obamacare; they see the world differently – Average GOP district: 73% white voters; Democratic district: 52% House Republicans: How did they get there? – 117 (1/2) won with >60% of vote. Their concern: GOP primary – Democrats got 1.4 million more votes for all House seats, but GOP controls, 234-201. Why? Redistricting after 2010 census: Republicans controlled state governments in 21 states land redrew districts Obama won PA, VA and OH in 2012, but GOP dominated redistricting Democrats won only 5 of 18 House seats in PA, 3 of 11 in VA, 4 of 16 in OH Republicans may control the House until 2022 (after 2020 census) Washington DC – gridlock, shutdown 16

17. Outlook for any: 31 bills passed in 2013 Outlook for any energy legislation: bleak to zero U.S. energy policy? No; tax/environmental policies Tax: – Fate of PTC fell in with broader negotiations around a comprehensive overhaul of the tax code – Tax extenders now in play; deep political divide over PTC – Carbon tax? No, but what about in return for stripping EPA of GHG and other authority? Major source of revenue – New tax structure for renewable energy investments (master limited partnership/REIT): unlikely Role of states in crafting energy policy increases Federal 17