Chairman's Message

Greg Abel, Chairman, President and CEO, MidAmerican Energy Holdings Company
MidAmerican Energy Holdings Company had a strong year in 2012, demonstrated by the results of the services we delivered to our customers. Our results reflect the discipline and leadership of our employees, who execute on our core principles of customer service, employee commitment, environmental respect, regulatory integrity, operational excellence and financial strength.

Our accomplishments in 2012 were led by the announcement of the formation of MidAmerican Renewables, which includes solar, wind, geothermal and hydro assets. We are building the world’s two largest solar projects – Topaz Solar Farms and the Antelope Valley Solar Projects I and II – and we acquired the 300-megawatt Pinyon Pines I and II wind projects. These projects, all located in California, will help the state meet its mandate to generate 33 percent of its power from renewable sources by 2020. The 81-megawatt Bishop Hill II wind project was placed in-service, and the Agua Caliente solar project in Arizona began delivering electricity to the grid.

Our businesses continue to grow, helping deliver sustainable energy solutions for our customers. Kern River Gas Transmission Company delivers approximately 32 percent of the natural gas consumed in California and together with Northern Natural Gas Company delivered 8 percent of the natural gas used in the U.S.; Northern Powergrid is the third-largest of six electricity distribution companies in Great Britain, serving 3.9 million homes and businesses; and MidAmerican Energy Company has the largest wind portfolio of any rate-regulated utility in the U.S.

Customer satisfaction survey results continue to demonstrate our businesses’ emphasis on meeting and exceeding our customers’ expectations for service. MidAmerican Energy ranked highest in its regional segment in three of four 2012 J.D. Power and Associates customer satisfaction studies. In the 17th Edition Mastio & Company Customer Satisfaction Survey, MidAmerican Energy Pipeline Group – comprising Northern Natural Gas and Kern River – ranked first in the major organizational group category for the eighth consecutive year.

Northern Powergrid successfully delivered on its plan for Distribution Price Control Review 5. Operating cost-control initiatives and ongoing capital unit cost improvements delivered outperformance against the cost allowances, while executing on a significant capital program. The efficiencies will result in long-term savings for customers.

We make no compromise when it comes to safety, and our 2012 safety performance improved over already strong 2011 results. CalEnergy Philippines celebrated 1.75 million man-hours worked without a lost-time accident or recordable injury. Northern Natural Gas received awards for safety excellence from the National Safety Council Iowa-Illinois Chapter and the Omaha Safety Council. Northern Powergrid received gold awards from the Royal Society for the Prevention of Accidents for its safety performance. The true reward is that we have made our work environment safer for our employees, customers and the public.

By building and operating our energy assets to achieve optimum efficiency, we deliver high levels of reliability while providing cost-effective energy to our customers.

PacifiCorp and MidAmerican Energy Company collaborated on an initiative to improve already solid equivalent availability at our fossil-fueled generation plants, leading to four of our generation plants setting life-of-plant records for availability.

MidAmerican Energy added 407 megawatts of wind-powered generation in Iowa with the completion of its two-year 1,001-megawatt expansion project. Together, MidAmerican Energy and PacifiCorp own 3,316 megawatts of wind-powered generation.

PacifiCorp neared completion on the Mona-to-Oquirrh segment of its Energy Gateway transmission expansion program to add approximately 2,000 miles of new high-voltage transmission lines in the western U.S.

Since MidAmerican purchased Northern Natural Gas 10 years ago, more than $1 billion has been invested in the long-term integrity of the pipeline. In 2012, the company’s compressor stations achieved 99.99 percent reliability. Kern River completed construction of the Mountain Pass lateral, which provides nearly 24.3 million cubic feet of natural gas transmission capacity to Molycorp Minerals LLC’s Mountain Pass rare earth mine.

Respect for the environment is deeply ingrained in our business culture and demonstrated in our operational performance. We work to balance the needs of our customers while minimizing the impact of our operations on the environment.

MidAmerican Energy and PacifiCorp continued to advance emissions reduction projects across their existing thermal generation fleets, enabling the businesses to properly operate those assets on a long-term basis as a low-cost solution for customers. PacifiCorp’s Lake Side 2 natural gas-fueled combined-cycle generating facility is well-positioned to achieve commercial operation in 2014. Through active participation with the Avian Power Line Interaction Committee and the U.S. Department of the Interior, PacifiCorp served as one of the primary authors in updating a manual for all U.S. utilities on avian protection to reduce bird collisions with power lines.

At Topaz Solar Farms, 17,000 acres have been set aside for habitat mitigation and more acres will be added in the future, eventually resulting in a 22,000-acre nature preserve in the Carrizo Plain.

MidAmerican’s financial results, including net income, were strong across our businesses. At year-end 2012, we had assets of $52 billion; nearly triple the amount of 10 years ago. We are proud to be a consolidated subsidiary of Berkshire Hathaway, and we are pleased with the benefits this relationship brings to our customers. Our management team’s extensive experience in the energy industry combined with Berkshire Hathaway’s unparalleled financial strength and our shared culture of integrity uniquely position us to deliver sustainable energy solutions for our customers.

Being part of Berkshire Hathaway and operating our businesses to the highest standards of integrity creates opportunities. In 2013, HomeServices will launch the Berkshire Hathaway HomeServices franchise brand as part of its acquisition of a two-thirds interest in the Prudential and Real Living real estate franchise networks.

Results mean achieving balanced outcomes for all stakeholders. Effectively serving our customers is a fundamental priority for MidAmerican, and it’s what we do best. Our disciplined approach to managing our business is a strong foundation that helps ensure we will continue to deliver the best possible results for our customers, today and in the future.