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

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

For the transition period from _________to _________



Commission	Exact name of registrant as specified in its charter;	IRS Employer
File Number	State or other jurisdiction of incorporation or organization	Identification No.

333-90553	MIDAMERICAN FUNDING, LLC	47-0819200
	(An Iowa Limited Liability Company)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580

333-190862	MIDAMERICAN ENERGY COMPANY	42-1425214
	(An Iowa Corporation)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580

(515) 242-4300
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since 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.



MidAmerican Funding, LLC	Yes £ No S	MidAmerican Energy Company	Yes S No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to 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).



MidAmerican Funding, LLC	Yes S No £	MidAmerican Energy Company	Yes S No £

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer £	Accelerated filer £	Non-accelerated filer S	Smaller reporting company £

Indicate by check mark whether either registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No S

All of the member's equity of MidAmerican Funding, LLC was held by its parent company, Berkshire Hathaway Energy Company, as of October 31, 2015.

All common stock of MidAmerican Energy Company is held by its parent company, MHC Inc., which is a direct, wholly owned subsidiary of MidAmerican Funding, LLC. As of October 31, 2015, 70,980,203 shares of MidAmerican Energy Company common stock, without par value, were outstanding.

MidAmerican Funding, LLC and MidAmerican Energy Company separately file this combined Form 10-Q. Information relating to each individual registrant is filed by such registrant on its own behalf. MidAmerican Energy Company makes no representation as to information relating to any other subsidiary of MidAmerican Funding, LLC.

TABLE OF CONTENTS

PART I



Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
Signatures		42
Exhibit Index		43

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 4, and Part II - Items 1 through 6, the following terms have the definitions indicated.



Companies
BHE		Berkshire Hathaway Energy Company
MidAmerican Funding		MidAmerican Funding, LLC
MidAmerican Energy		MidAmerican Energy Company
Berkshire Hathaway		Berkshire Hathaway Inc. and its subsidiaries

Certain Industry Terms
AFUDC		Allowance for Funds Used During Construction
DSM		Demand-side Management
Dth		Decatherms
EPA		United States Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
GWh		Gigawatt Hours
IUB		Iowa Utilities Board
MW		Megawatts
MWh		Megawatt Hours

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 MidAmerican Funding's and MidAmerican Energy'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 MidAmerican Funding or MidAmerican Energy 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 MidAmerican Energy'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 MidAmerican Energy's ability to recover costs in 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 MidAmerican Energy's ability to obtain long-term contracts with customers and suppliers;


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


•	a high degree of variance between actual and forecasted load or generation that could impact MidAmerican Energy's hedging strategy;


•	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 MidAmerican Energy'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 MidAmerican Energy's credit facilities;


•	changes in MidAmerican Energy's credit ratings;


•	risks relating to nuclear generation;


•	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 MidAmerican Energy's ability to recover such costs in regulated 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;


•	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;


•	the impact of new accounting guidance or changes in current accounting estimates and assumptions on MidAmerican Funding's or MidAmerican Energy's consolidated financial results;


•	the effects of catastrophic and other unforeseen events, which may be caused by factors beyond MidAmerican Energy's control or by a breakdown or failure of its operating assets, including storms, floods, fires, explosions, litigation, wars, terrorism and embargoes; and


•	other business or investment considerations that may be disclosed from time to time in MidAmerican Funding's or MidAmerican Energy's filings with the United States Securities and Exchange Commission or in other publicly disseminated written documents.

Further details of the potential risks and uncertainties affecting MidAmerican Funding or MidAmerican Energy are described in their filings with the United States Securities and Exchange Commission, including Part II, Item 1A and other discussions contained in this Form 10-Q. MidAmerican Funding and MidAmerican Energy undertake 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.

iii

PART I



Item 1.	Financial Statements

MidAmerican Energy Company



Report of Independent Registered Public Accounting Firm	2
Balance Sheets	3
Statements of Operations	4
Statements of Comprehensive Income	5
Statements of Changes in Equity	6
Statements of Cash Flows	7
Notes to Financial Statements	8

MidAmerican Funding, LLC and Subsidiaries

Report of Independent Registered Public Accounting Firm	19
Consolidated Balance Sheets	20
Consolidated Statements of Operations	21
Consolidated Statements of Comprehensive Income	22
Consolidated Statements of Changes in Equity	23
Consolidated Statements of Cash Flows	24
Notes to Consolidated Financial Statements	25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

MidAmerican Energy Company

Des Moines, Iowa

We have reviewed the accompanying balance sheet of MidAmerican Energy Company (the "Company") as of September 30, 2015, and the related statements of operations and comprehensive income for the three-month and nine-month periods ended September 30, 2015 and 2014, and of changes in equity and cash flows for the nine-month periods ended September 30, 2015 and 2014. 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 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 balance sheet and statement of capitalization (not presented herein) of MidAmerican Energy Company as of December 31, 2014, and the related 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 27, 2015, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2014 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

November 6, 2015

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	September 30, 2015			December 31, 2014
ASSETS
Utility plant, net:
Electric	$	14,083		$	13,426
Gas	1,482			1,432
Gross utility plant in service	15,565			14,858
Accumulated depreciation and amortization	(5,140		)	(4,954		)
Utility plant in service, net	10,425			9,904
Construction work in progress	821			606
Total utility plant, net	11,246			10,510
Current assets:
Cash and cash equivalents	245			29
Receivables, net	383			433
Income taxes receivable	1			307
Inventories	218			185
Other	58			87
Total current assets	905			1,041
Other assets:
Regulatory assets	1,037			908
Investments and nonregulated property, net	626			634
Other	170			164
Total other assets	1,833			1,706
Total assets	$	13,984		$	13,257
CAPITALIZATION AND LIABILITIES
Capitalization:
MidAmerican Energy common shareholder's equity	$	4,702		$	4,250
Long-term debt, excluding current portion	3,606			3,630
Total capitalization	8,308			7,880
Current liabilities:
Short-term debt	—			50
Current portion of long-term debt	460			426
Accounts payable	441			392
Taxes accrued	163			128
Interest accrued	35			40
Other	177			131
Total current liabilities	1,276			1,167
Other liabilities:
Deferred income taxes	2,815			2,663
Asset retirement obligations	462			432
Regulatory liabilities	831			837
Other	292			278
Total other liabilities	4,400			4,210
Total capitalization and liabilities	$	13,984		$	13,257

The accompanying notes are an integral part of these financial statements.

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014
Operating revenue:
Regulated electric	$	585		$	539		$	1,472		$	1,415
Regulated gas	94			99			499			746
Nonregulated	241			224			688			695
Total operating revenue	920			862			2,659			2,856

Operating costs and expenses:
Regulated:
Cost of fuel, energy and capacity	125			139			351			405
Cost of gas sold	48			54			304			546
Other operating expenses	117			119			353			351
Maintenance	48			50			148			171
Depreciation and amortization	101			88			300			258
Property and other taxes	30			31			93			92
Total regulated operating costs and expenses	469			481			1,549			1,823
Nonregulated:
Cost of sales	232			213			648			648
Other	9			8			24			21
Total nonregulated operating costs and expenses	241			221			672			669
Total operating costs and expenses	710			702			2,221			2,492

Operating income	210			160			438			364

Non-operating income:
Interest income	—			—			1			1
Allowance for equity funds	5			11			16			30
Other, net	(3		)	2			1			7
Total non-operating income	2			13			18			38

Fixed charges:
Interest on long-term debt	44			44			132			129
Other interest expense	—			—			1			1
Allowance for borrowed funds	(2		)	(4		)	(6		)	(12		)
Total fixed charges	42			40			127			118

Income before income tax benefit	170			133			329			284
Income tax benefit	(64		)	(37		)	(130		)	(75		)

Net income	$	234		$	170		$	459		$	359

The accompanying notes are an integral part of these financial statements.

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014

Net income	$	234		$	170		$	459		$	359

Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on available-for-sale securities, net of tax of $-, $-, $- and $1	(1		)	—			—			1
Unrealized (losses) gains on cash flow hedges, net of tax of $(4), $(6), $(5) and $10	(3		)	(8		)	(7		)	15
Total other comprehensive (loss) income, net of tax	(4		)	(8		)	(7		)	16

Comprehensive income	$	230		$	162		$	452		$	375

The accompanying notes are an integral part of these financial statements.

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)



	Common Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income, Net			Total Equity

Balance, December 31, 2013	$	561	$	3,295	$	(11	)	$	3,845
Net income	—		359		—			359
Other comprehensive income	—		—		16			16
Balance, September 30, 2014	$	561	$	3,654	$	5		$	4,220

Balance, December 31, 2014	$	561	$	3,712	$	(23	)	$	4,250
Net income	—		459		—			459
Other comprehensive loss	—		—		(7		)	(7		)
Balance, September 30, 2015	$	561	$	4,171	$	(30	)	$	4,702

The accompanying notes are an integral part of these financial statements.

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Nine-Month Periods
	Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	459		$	359
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	300			258
Deferred income taxes and amortization of investment tax credits	24			(14		)
Changes in other assets and liabilities	36			35
Other, net	(7		)	(38		)
Changes in other operating assets and liabilities:
Receivables, net	49			31
Inventories	(33		)	34
Derivative collateral, net	49			(33		)
Pension and other postretirement benefit plans	(6		)	(2		)
Accounts payable	(78		)	(30		)
Taxes accrued, net	341			72
Other current assets and liabilities	16			11
Net cash flows from operating activities	1,150			683

Cash flows from investing activities:
Utility construction expenditures	(880		)	(967		)
Purchases of available-for-sale securities	(91		)	(69		)
Proceeds from sales of available-for-sale securities	83			64
Other, net	4			8
Net cash flows from investing activities	(884		)	(964		)

Cash flows from financing activities:
Proceeds from long-term debt	—			847
Repayments of long-term debt	—			(356		)
Net repayments of short-term debt	(50		)	—
Other, net	—			(8		)
Net cash flows from financing activities	(50		)	483

Net change in cash and cash equivalents	216			202
Cash and cash equivalents at beginning of period	29			194
Cash and cash equivalents at end of period	$	245		$	396

The accompanying notes are an integral part of these financial statements.

MIDAMERICAN ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

(Unaudited)


(1)	General

MidAmerican Energy Company ("MidAmerican Energy") is a public utility with electric and natural gas operations and is the principal subsidiary of MHC Inc. ("MHC"). MHC is a holding company that conducts no business other than the ownership of its subsidiaries and related corporate services. MHC's nonregulated subsidiaries include Midwest Capital Group, Inc. and MEC Construction Services Co. MHC is the direct, wholly owned subsidiary of MidAmerican Funding, LLC ("MidAmerican Funding"), which is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The unaudited 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 Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Financial Statements as of September 30, 2015, and for the three- and nine-month periods ended September 30, 2015 and 2014. The results of operations for the three- and nine-month periods ended September 30, 2015, are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited 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 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 Financial Statements. Note 2 of Notes to Financial Statements included in MidAmerican Energy's Annual Report on Form 10-K for the year ended December 31, 2014, describes the most significant accounting policies used in the preparation of the unaudited Financial Statements. There have been no significant changes in MidAmerican Energy's assumptions regarding significant accounting estimates and policies during the nine-month period ended September 30, 2015.


(2)	New Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, which amends FASB Accounting Standards Codification ("ASC") Subtopic 835-30, "Interest - Imputation of Interest." The amendments in this guidance require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability instead of as an asset. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. This guidance must be adopted retrospectively, wherein the balance sheet of each period presented should be adjusted to reflect the new guidance. MidAmerican Energy is currently evaluating the impact of adopting this guidance on its Financial Statements and disclosures included within Notes to 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. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. MidAmerican Energy is currently evaluating the impact of adopting this guidance on its Financial Statements and disclosures included within Notes to Financial Statements.


(3)	Components of Accumulated Other Comprehensive Income (Loss), Net

The following table shows the change in accumulated other comprehensive income (loss), net ("AOCI") by each component of other comprehensive income, net of applicable income taxes (in millions):



	Unrealized			Unrealized			Accumulated
	Losses on			(Losses) Gains			Other
	Available-For-Sale			on Cash Flow			Comprehensive
	Securities			Hedges			(Loss) Income, Net

Balance, December 31, 2013	$	(4	)	$	(7	)	$	(11	)
Other comprehensive income	1			15			16
Balance, September 30, 2014	$	(3	)	$	8		$	5

Balance, December 31, 2014	$	(3	)	$	(20	)	$	(23	)
Other comprehensive loss	—			(7		)	(7		)
Balance, September 30, 2015	$	(3	)	$	(27	)	$	(30	)

For information regarding cash flow hedge reclassifications from AOCI to net income in their entirety, refer to Note 6.


(4)	Income Taxes

A reconciliation of the federal statutory income tax rate to MidAmerican Energy's effective income tax rate applicable to income before income tax benefit is as follows:



	Three-Month Periods				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2015		2014		2015		2014

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(61	)	(56	)	(62	)	(56	)
State income tax, net of federal income tax benefit	(10	)	(3	)	(6	)	—
Effects of ratemaking	(2	)	(4	)	(7	)	(5	)
Effective income tax rate	(38	)%	(28	)%	(40	)%	(26	)%

Income tax credits relate primarily to production tax credits from MidAmerican Energy's wind-powered generating facilities. 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.

Berkshire Hathaway includes BHE and subsidiaries in its United States federal income tax return. Consistent with established regulatory practice, MidAmerican Energy's provision for income taxes has been computed on a stand-alone basis, and substantially all of its currently payable or receivable income taxes are remitted to or received from BHE. MidAmerican Energy received net cash payments for income taxes from BHE totaling $513 million and $150 million for the nine-month periods ended September 30, 2015 and 2014, respectively.


(5)	Employee Benefit Plans

MidAmerican Energy sponsors a noncontributory defined benefit pension plan covering a majority of all employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc. MidAmerican Energy also sponsors certain postretirement healthcare and life insurance benefits covering substantially all retired employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc.

Net periodic benefit cost for the plans of MidAmerican Energy and the aforementioned affiliates included the following components (in millions):



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014
Pension:
Service cost	$	3		$	4		$	9		$	11
Interest cost	8			8			24			26
Expected return on plan assets	(11		)	(11		)	(34		)	(34		)
Net amortization	—			—			1			1
Net periodic benefit cost	$	—		$	1		$	—		$	4

Other postretirement:
Service cost	$	2		$	2		$	5		$	5
Interest cost	1			2			6			7
Expected return on plan assets	(4		)	(4		)	(11		)	(11		)
Net amortization	—			(1		)	(2		)	(3		)
Net periodic benefit cost (benefit)	$	(1	)	$	(1	)	$	(2	)	$	(2	)

Employer contributions to the pension and other postretirement benefit plans are expected to be $8 million and $1 million, respectively, during 2015. As of September 30, 2015, $5 million and $1 million of contributions had been made to the pension and other postretirement benefit plans, respectively.


(6)	Risk Management and Hedging Activities

MidAmerican Energy is exposed to the impact of market fluctuations in commodity prices and interest rates. MidAmerican Energy is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk as it has an obligation to serve retail customer load in its regulated service territory. MidAmerican Energy also provides nonregulated retail electricity and natural gas services in competitive markets, which creates contractual obligations to provide electric and natural gas services. MidAmerican Energy's 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 and future debt issuances. MidAmerican Energy does not engage in a material amount of proprietary trading activities.

MidAmerican Energy has established a risk management process that is designed to identify, assess, monitor, report, manage and mitigate each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, MidAmerican Energy 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. MidAmerican Energy 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, MidAmerican Energy may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate its exposure to interest rate risk. MidAmerican Energy does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in MidAmerican Energy's accounting policies related to derivatives. Refer to Note 7 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 MidAmerican Energy's derivative contracts, on a gross basis, and reconciles those amounts to the amounts presented on a net basis on the Balance Sheets (in millions):



	Current Assets - Other			Other Assets - Other		Current Liabilities - Other			Other Liabilities - Other			Total
As of September 30, 2015:
Not designated as hedging contracts⁽¹⁾:
Commodity assets	$	13		$	4	$	10		$	2		$	29
Commodity liabilities	(2		)	—		(41		)	(11		)	(54		)
Total	11			4		(31		)	(9		)	(25		)

Designated as hedging contracts:
Commodity assets	—			—		2			—			2
Commodity liabilities	—			—		(25		)	(25		)	(50		)
Total	—			—		(23		)	(25		)	(48		)

Total derivatives	11			4		(54		)	(34		)	(73		)
Cash collateral receivable	—			—		17			8			25
Total derivatives - net basis	$	11		$	4	$	(37	)	$	(26	)	$	(48	)



As of December 31, 2014:
Not designated as hedging contracts⁽¹⁾:
Commodity assets	$	14	$	3	$	19		$	1		$	37
Commodity liabilities	—		—		(69		)	(4		)	(73		)
Total	14		3		(50		)	(3		)	(36		)

Designated as hedging contracts:
Commodity assets	—		—		4			2			6
Commodity liabilities	—		—		(27		)	(17		)	(44		)
Total	—		—		(23		)	(15		)	(38		)

Total derivatives	14		3		(73		)	(18		)	(74		)
Cash collateral receivable	—		—		42			5			47
Total derivatives - net basis	$	14	$	3	$	(31	)	$	(13	)	$	(27	)


(1)	MidAmerican Energy's commodity derivatives not designated as hedging contracts are generally included in regulated rates, and as of September 30, 2015 and December 31, 2014, a net regulatory asset of $23 million and $38 million, respectively, was recorded related to the net derivative liability of $25 million and $36 million, respectively.

Not Designated as Hedging Contracts

The following table reconciles the beginning and ending balances of MidAmerican Energy'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,
	2015			2014			2015			2014

Beginning balance	$	28		$	48		$	38		$	10
Changes in fair value recognized in net regulatory assets	10			2			29			64
Net (losses) gains reclassified to operating revenue	(12		)	3			(34		)	(21		)
Net losses reclassified to cost of gas sold	(3		)	(2		)	(10		)	(2		)
Ending balance	$	23		$	51		$	23		$	51

The following table summarizes the pre-tax gains (losses) included on the Statements of Operations associated with MidAmerican Energy's commodity derivative contracts not designated as hedging contracts and not recorded as a net regulatory asset or liability (in millions):



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014

Nonregulated operating revenue	$	5		$	2		$	9		$	(6	)
Regulated cost of fuel, energy and capacity	—			—			2			—
Nonregulated cost of sales	(8		)	(3		)	(13		)	18
Total	$	(3	)	$	(1	)	$	(2	)	$	12

Designated as Hedging Contracts

MidAmerican Energy uses commodity derivative contracts accounted for as cash flow hedges to hedge electricity and natural gas commodity prices for delivery to nonregulated customers. The following table reconciles the beginning and ending balances of MidAmerican Energy'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,
	2015			2014			2015			2014

Beginning balance	$	39		$	(28	)	$	34		$	11
Changes in fair value recognized in OCI	21			19			40			(60		)
Net (losses) gains reclassified to nonregulated cost of sales	(14		)	(5		)	(28		)	35
Ending balance	$	46		$	(14	)	$	46		$	(14	)

Realized gains and losses on hedges and hedge ineffectiveness are recognized in income as nonregulated operating revenue or nonregulated cost of sales depending upon the nature of the item being hedged. For the three- and nine-month periods ended September 30, 2015 and 2014, hedge ineffectiveness was insignificant. As of September 30, 2015, MidAmerican Energy had cash flow hedges with expiration dates extending through December 2019, and $23 million of pre-tax net 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 commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of (in millions):



	Unit of	September 30,	December 31,
	Measure	2015	2014

Electricity purchases	Megawatt hours	15	14
Natural gas purchases	Decatherms	17	19

Credit Risk

MidAmerican Energy is 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 MidAmerican Energy's counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, MidAmerican Energy analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty, and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, MidAmerican Energy enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtains third-party guarantees, letters of credit and cash deposits. If required, MidAmerican Energy exercises 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 MidAmerican Energy's collateral requirements on its 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 MidAmerican Energy's creditworthiness. These rights can vary by contract and by counterparty. As of September 30, 2015, MidAmerican Energy's credit ratings from the three recognized credit rating agencies were investment grade.

The aggregate fair value of MidAmerican Energy's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $70 million and $52 million as of September 30, 2015 and December 31, 2014, respectively, for which MidAmerican Energy had posted collateral of $- million at each date. If all credit-risk-related contingent features for derivative contracts in liability positions had been triggered as of September 30, 2015 and December 31, 2014, MidAmerican Energy would have been required to post $59 million and $36 million, respectively, of additional collateral. MidAmerican Energy's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation, or other factors.


(7)	Fair Value Measurements

The carrying value of MidAmerican Energy's cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. MidAmerican Energy has various financial assets and liabilities that are measured at fair value on the Financial Statements using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:


•	Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that MidAmerican Energy has the ability to access at the measurement date.

•

Level 2 — Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).


•	Level 3 — Unobservable inputs reflect MidAmerican Energy's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. MidAmerican Energy develops these inputs based on the best information available, including its own data.

The following table presents MidAmerican Energy's assets and liabilities recognized on the Balance Sheets and measured at fair value on a recurring basis (in millions):



	Input Levels for Fair Value Measurements
	Level 1			Level 2			Level 3			Other⁽¹⁾			Total
As of September 30, 2015:
Assets:
Commodity derivatives	$	—		$	15		$	16		$	(16	)	$	15
Money market mutual funds⁽²⁾	247			—			—			—			247
Debt securities:
United States government obligations	136			—			—			—			136
International government obligations	—			2			—			—			2
Corporate obligations	—			40			—			—			40
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			3			—			—			3
Auction rate securities	—			—			26			—			26
Equity securities:
United States companies	225			—			—			—			225
International companies	5			—			—			—			5
Investment funds	4			—			—			—			4
	$	617		$	62		$	42		$	(16	)	$	705

Liabilities - commodity derivatives	$	(12	)	$	(69	)	$	(23	)	$	41		$	(63	)



As of December 31, 2014:
Assets:
Commodity derivatives	$	1		$	18		$	24		$	(26	)	$	17
Money market mutual funds⁽²⁾	1			—			—			—			1
Debt securities:
United States government obligations	136			—			—			—			136
International government obligations	—			1			—			—			1
Corporate obligations	—			39			—			—			39
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			2			—			—			2
Auction rate securities	—			—			26			—			26
Equity securities:
United States companies	238			—			—			—			238
International companies	5			—			—			—			5
	$	381		$	62		$	50		$	(26	)	$	467

Liabilities - commodity derivatives	$	(18	)	$	(87	)	$	(12	)	$	73		$	(44	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $25 million and $47 million as of September 30, 2015 and December 31, 2014, respectively.


(2)	Amounts are included in cash and cash equivalents and investments and nonregulated property, net on the Balance Sheets. The fair value of these money market mutual funds approximates cost.

Derivative contracts are recorded on the 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 MidAmerican Energy transacts. When quoted prices for identical contracts are not available, MidAmerican Energy uses forward price curves. Forward price curves represent MidAmerican Energy's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. MidAmerican Energy 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 MidAmerican Energy. Market price quotations are generally readily obtainable for the applicable term of MidAmerican Energy's outstanding derivative contracts; therefore, MidAmerican Energy'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, MidAmerican Energy 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, related volatility, counterparty creditworthiness and duration of contracts. Refer to Note 6 for further discussion regarding MidAmerican Energy's risk management and hedging activities.

MidAmerican Energy'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 MidAmerican Energy'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 MidAmerican Energy'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 MidAmerican Energy'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,
	Commodity Derivatives			Auction Rate Securities			Commodity Derivatives			Auction Rate Securities
2015:
Beginning balance	$	(7	)	$	27		$	12		$	26
Changes included in earnings⁽¹⁾	2			—			6			—
Changes in fair value recognized in OCI	(2		)	(1		)	(5		)	—
Changes in fair value recognized in net regulatory assets	(5		)	—			(20		)	—
Purchases	—			—			1			—
Settlements	5			—			(1		)	—
Ending balance	$	(7	)	$	26		$	(7	)	$	26

2014:
Beginning balance	$	(2	)	$	25		$	(3	)	$	23
Changes included in earnings⁽¹⁾	3			—			(1		)	—
Changes in fair value recognized in OCI	—			—			4			2
Changes in fair value recognized in net regulatory assets	—			—			(1		)	—
Settlements	(7		)	—			(5		)	—
Ending balance	$	(6	)	$	25		$	(6	)	$	25

(1)

Changes included in earnings are reported as nonregulated operating revenue on the Statements of Operations. For commodity derivatives held as of September 30, 2015 and 2014, net unrealized gains included in earnings for the three-month periods ended September 30, 2015 and 2014, totaled $2 million and $1 million, respectively, and for the nine-month periods ended September 30, 2015 and 2014, totaled $6 million and $2 million, respectively.

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



	As of September 30, 2015				As of December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	4,066	$	4,470	$	4,056	$	4,581


(8)	Commitments and Contingencies

Commitments

During the three-month period ended September 30, 2015, MidAmerican Energy entered into several contracts totaling $541 million for the construction of wind-powered generating facilities to be placed in service in 2016, for which all of the purchase obligation is expected to be paid by the end of 2016. During the nine-month period ended September 30, 2015, MidAmerican Energy also entered into non-cancelable easements totaling $115 million with minimum commitments ranging through 2048 and non-cancelable maintenance and service contracts totaling $73 million with minimum commitments ranging through 2021. The easements and maintenance and service contracts relate to MidAmerican Energy's wind-powered generating facilities being placed in service in 2015 and 2016.

Legal Matters

MidAmerican Energy is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Energy does not believe that such normal and routine litigation will have a material impact on its financial results.

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding air and water quality, 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 its current and future operations. MidAmerican Energy believes it is in material compliance with all applicable laws and regulations.


(9)	Segment Information

MidAmerican Energy has identified three reportable segments: regulated electric, regulated gas and nonregulated energy. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting gas owned by others through its distribution system. Pricing for regulated electric and regulated gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. The nonregulated energy segment derives most of its revenue from nonregulated retail electric and gas activities. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost.

The following tables provide information on a reportable segment basis (in millions):



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015		2014
Operating revenue:
Regulated electric	$	585		$	539		$	1,472	$	1,415
Regulated gas	94			99			499		746
Nonregulated energy	241			224			688		695
Total operating revenue	$	920		$	862		$	2,659	$	2,856

Depreciation and amortization:
Regulated electric	$	91		$	78		$	270	$	229
Regulated gas	10			10			30		29
Total depreciation and amortization	$	101		$	88		$	300	$	258

Operating income (loss):
Regulated electric	$	215		$	163		$	376	$	294
Regulated gas	(6		)	(6		)	45		49
Nonregulated energy	1			3			17		21
Total operating income (loss)	$	210		$	160		$	438	$	364



	As of
	September 30, 2015		December 31, 2014
Total assets:
Regulated electric	$	12,594	$	11,859
Regulated gas	1,222		1,231
Nonregulated energy	168		167
Total assets	$	13,984	$	13,257


(10)	Transfer of Nonregulated Energy Operations

In the second quarter of 2015, MidAmerican Energy filed with the Iowa Utilities Board ("IUB") and Illinois Commerce Commission ("ICC") for approval to transfer the assets and liabilities of its unregulated retail services business to a subsidiary of BHE. MidAmerican Energy's request was approved by the IUB in July 2015 and by the ICC in October 2015. The transfer will be made at MidAmerican Energy’s carrying value of the assets and liabilities as of the distribution date and will be recorded by MidAmerican Energy as a dividend. As of and for the nine-month period ended September 30, 2015, the financial results of the unregulated retail services business consisted of net assets of $86 million, operating revenue of $685 million, net income of $10 million and cash flows from operating activities of $25 million. The transfer is expected to occur in the first quarter of 2016.


(11)	Subsequent Event

In October 2015, MidAmerican Energy issued $200 million of its 3.50% First Mortgage Bonds due October 2024 and $450 million of its 4.25% First Mortgage Bonds due May 2046. The net proceeds will be used for the repayment of $426 million of long-term debt maturing December 31, 2015, and for general corporate purposes.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member of

MidAmerican Funding, LLC

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries (the "Company") as of September 30, 2015, and the related consolidated statements of operations and comprehensive income for the three-month and nine-month periods ended September 30, 2015 and 2014, and of changes in equity and cash flows for the nine-month periods ended September 30, 2015 and 2014. These interim financial statements are the responsibility of the Company's management.

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 and consolidated statement of capitalization (not presented herein) of MidAmerican Funding, LLC and subsidiaries as of December 31, 2014, 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 27, 2015, 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, 2014 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 6, 2015

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	September 30, 2015			December 31, 2014
ASSETS
Utility plant, net:
Electric	$	14,083		$	13,426
Gas	1,482			1,432
Gross utility plant in service	15,565			14,858
Accumulated depreciation and amortization	(5,140		)	(4,954		)
Utility plant in service, net	10,425			9,904
Construction work in progress	821			606
Total utility plant, net	11,246			10,510
Current assets:
Cash and cash equivalents	246			30
Receivables, net	386			437
Income taxes receivable	1			303
Inventories	218			185
Other	58			87
Total current assets	909			1,042
Other assets:
Goodwill	1,270			1,270
Regulatory assets	1,037			908
Investments and nonregulated property, net	642			651
Other	170			163
Total other assets	3,119			2,992
Total assets	$	15,274		$	14,544
CAPITALIZATION AND LIABILITIES
Capitalization:
MidAmerican Funding member's equity	$	5,525		$	5,073
Long-term debt, excluding current portion	3,931			3,955
Total capitalization	9,456			9,028
Current liabilities:
Short-term debt	—			50
Current portion of long-term debt	460			426
Note payable to affiliate	139			136
Accounts payable	441			392
Taxes accrued	167			128
Interest accrued	38			48
Other	177			131
Total current liabilities	1,422			1,311
Other liabilities:
Deferred income taxes	2,810			2,657
Asset retirement obligations	462			432
Regulatory liabilities	831			837
Other	293			279
Total other liabilities	4,396			4,205
Total capitalization and liabilities	$	15,274		$	14,544

The accompanying notes are an integral part of these consolidated financial statements.

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014
Operating revenue:
Regulated electric	$	585		$	539		$	1,472		$	1,415
Regulated gas	94			99			499			746
Nonregulated	242			226			698			708
Total operating revenue	921			864			2,669			2,869

Operating costs and expenses:
Regulated:
Cost of fuel, energy and capacity	125			139			351			405
Cost of gas sold	48			54			304			546
Other operating expenses	117			119			353			351
Maintenance	48			50			148			171
Depreciation and amortization	101			88			300			258
Property and other taxes	30			31			93			92
Total regulated operating costs and expenses	469			481			1,549			1,823
Nonregulated:
Cost of sales	232			213			655			648
Other	9			9			25			33
Total nonregulated operating costs and expenses	241			222			680			681
Total operating costs and expenses	710			703			2,229			2,504

Operating income	211			161			440			365

Non-operating income:
Interest income	—			—			1			1
Allowance for equity funds	5			11			16			30
Other, net	(3		)	3			15			12
Total non-operating income	2			14			32			43

Fixed charges:
Interest on long-term debt	50			50			149			146
Other interest expense	—			—			1			1
Allowance for borrowed funds	(2		)	(4		)	(6		)	(12		)
Total fixed charges	48			46			144			135

Income before income tax benefit	165			129			328			273
Income tax benefit	(66		)	(39		)	(131		)	(80		)

Net income	$	231		$	168		$	459		$	353

The accompanying notes are an integral part of these consolidated financial statements.

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014

Net income	$	231		$	168		$	459		$	353

Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on available-for-sale securities, net of tax of $-, $-, $- and $1	(1		)	—			—			1
Unrealized (losses) gains on cash flow hedges, net of tax of $(4), $(6), $(5) and $10	(3		)	(8		)	(7		)	15
Total other comprehensive (loss) income, net of tax	(4		)	(8		)	(7		)	16

Comprehensive income	$	227		$	160		$	452		$	369

The accompanying notes are an integral part of these consolidated financial statements.

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)



	Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income, Net			Total Equity

Balance, December 31, 2013	$	1,679	$	3,009	$	(11	)	$	4,677
Net income	—		353		—			353
Other comprehensive income	—		—		16			16
Balance, September 30, 2014	$	1,679	$	3,362	$	5		$	5,046

Balance, December 31, 2014	$	1,679	$	3,417	$	(23	)	$	5,073
Net income	—		459		—			459
Other comprehensive loss	—		—		(7		)	(7		)
Balance, September 30, 2015	$	1,679	$	3,876	$	(30	)	$	5,525

The accompanying notes are an integral part of these consolidated financial statements.

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Nine-Month Periods
	Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	459		$	353
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	300			258
Deferred income taxes and amortization of investment tax credits	25			(15		)
Changes in other assets and liabilities	36			35
Other, net	(20		)	(30		)
Changes in other operating assets and liabilities:
Receivables, net	50			33
Inventories	(33		)	34
Derivative collateral, net	49			(33		)
Pension and other postretirement benefit plans	(6		)	(2		)
Accounts payable	(78		)	(30		)
Taxes accrued, net	341			71
Other current assets and liabilities	11			5
Net cash flows from operating activities	1,134			679

Cash flows from investing activities:
Utility construction expenditures	(880		)	(967		)
Purchases of available-for-sale securities	(91		)	(69		)
Proceeds from sales of available-for-sale securities	83			64
Proceeds from sales of investments	13			—
Other, net	4			10
Net cash flows from investing activities	(871		)	(962		)

Cash flows from financing activities:
Proceeds from long-term debt	—			847
Repayment of long-term debt	—			(356		)
Net change in note payable to affiliate	3			3
Net repayments of short-term debt	(50		)	—
Other, net	—			(8		)
Net cash flows from financing activities	(47		)	486

Net change in cash and cash equivalents	216			203
Cash and cash equivalents at beginning of period	30			194
Cash and cash equivalents at end of period	$	246		$	397

The accompanying notes are an integral part of these consolidated financial statements.

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


(1)	General

MidAmerican Funding, LLC ("MidAmerican Funding") is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway"). MidAmerican Funding's direct, wholly owned subsidiary is MHC Inc. ("MHC"), which constitutes substantially all of MidAmerican Funding's assets, liabilities and business activities except those related to MidAmerican Funding's long-term debt securities. MHC conducts no business other than the ownership of its subsidiaries and related corporate services. MHC's principal subsidiary is MidAmerican Energy Company ("MidAmerican Energy"), a public utility with electric and natural gas operations. Direct, wholly owned nonregulated subsidiaries of MHC are Midwest Capital Group, Inc. and MEC Construction Services Co.

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, 2015, and for the three- and nine-month periods ended September 30, 2015 and 2014. The results of operations for the three- and nine-month periods ended September 30, 2015, 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 MidAmerican Funding's Annual Report on Form 10-K for the year ended December 31, 2014, describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in MidAmerican Funding's assumptions regarding significant accounting estimates and policies during the nine-month period ended September 30, 2015.

Refer to Note 1 of MidAmerican Energy's Notes to Financial Statements.


(2)	New Accounting Pronouncements

Refer to Note 2 of MidAmerican Energy's Notes to Financial Statements.


(3)	Components of Accumulated Other Comprehensive Income (Loss), Net

Refer to Note 3 of MidAmerican Energy's Notes to Financial Statements.


(4)	Income Taxes

A reconciliation of the federal statutory income tax rate to MidAmerican Funding's effective income tax rate applicable to income before income tax benefit is as follows:



	Three-Month Periods				Nine-Month Periods
	Ended September 30,				Ended September 30,
	2015		2014		2015		2014

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(63	)	(58	)	(62	)	(58	)
State income tax, net of federal income tax benefit	(10	)	(3	)	(6	)	(1	)
Effects of ratemaking	(2	)	(4	)	(7	)	(5	)
Effective income tax rate	(40	)%	(30	)%	(40	)%	(29	)%

Berkshire Hathaway includes BHE and subsidiaries in its United States federal income tax return. Consistent with established regulatory practice, MidAmerican Funding's and MidAmerican Energy's provisions for income taxes have been computed on a stand-alone basis, and substantially all of their currently payable or receivable income taxes are remitted to or received from BHE. MidAmerican Funding received net cash payments for income taxes from BHE totaling $515 million and $153 million for the nine-month periods ended September 30, 2015 and 2014, respectively.


(5)	Employee Benefit Plans

Refer to Note 5 of MidAmerican Energy's Notes to Financial Statements.


(6)	Risk Management and Hedging Activities

Refer to Note 6 of MidAmerican Energy's Notes to Financial Statements.


(7)	Fair Value Measurements

Refer to Note 7 of MidAmerican Energy's Notes to Financial Statements.

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



	As of September 30, 2015				As of December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	4,391	$	4,891	$	4,381	$	5,012


(8)	Commitments and Contingencies

MidAmerican Funding is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Funding does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Refer to Note 8 of MidAmerican Energy's Notes to Financial Statements.

(9) Segment Information

MidAmerican Funding has identified three reportable segments: regulated electric, regulated gas and nonregulated energy. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting gas owned by others through its distribution system. Pricing for regulated electric and regulated gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. The nonregulated energy segment derives most of its revenue from nonregulated retail electric and gas activities. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost. "Other" in the tables below consists of the nonregulated subsidiaries of MidAmerican Funding not engaged in the energy business and parent company interest expense.

The following tables provide information on a reportable segment basis (in millions):



	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
	2015			2014			2015		2014
Operating revenue:
Regulated electric	$	585		$	539		$	1,472	$	1,415
Regulated gas	94			99			499		746
Nonregulated energy	241			224			688		695
Other	1			2			10		13
Total operating revenue	$	921		$	864		$	2,669	$	2,869

Depreciation and amortization:
Regulated electric	$	91		$	78		$	270	$	229
Regulated gas	10			10			30		29
Total depreciation and amortization	$	101		$	88		$	300	$	258

Operating income (loss):
Regulated electric	$	215		$	163		$	376	$	294
Regulated gas	(6		)	(6		)	45		49
Nonregulated energy	1			3			17		21
Other	1			1			2		1
Total operating income (loss)	$	211		$	161		$	440	$	365



	As of
	September 30, 2015		December 31, 2014
Total assets⁽¹⁾:
Regulated electric	$	13,785	$	13,050
Regulated gas	1,301		1,310
Nonregulated energy	168		167
Other	20		17
Total assets	$	15,274	$	14,544



(1)	Total assets by reportable segment reflect the assignment of goodwill to applicable reporting units.


(10)	Transfer of Nonregulated Energy Operations

Refer to Note 10 of MidAmerican Energy's Notes to Financial Statements.


(11)	Subsequent Event

Refer to Note 11 of MidAmerican Energy's Notes to Financial Statements.



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

MidAmerican Funding is an Iowa limited liability company whose sole member is BHE. MidAmerican Funding owns all of the outstanding common stock of MHC Inc., which owns all of the common stock of MidAmerican Energy, Midwest Capital Group, Inc. and MEC Construction Services Co. MidAmerican Energy is a public utility company headquartered in Des Moines, Iowa. MHC Inc., MidAmerican Funding and BHE are also headquartered in Des Moines, Iowa.

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of MidAmerican Funding and its subsidiaries and MidAmerican Energy as presented in this joint filing. Information in Management's Discussion and Analysis related to MidAmerican Energy, whether or not segregated, also relates to MidAmerican Funding. Information related to other subsidiaries of MidAmerican Funding pertains only to the discussion of the financial condition and results of operations of MidAmerican Funding. Where necessary, discussions have been segregated under the heading "MidAmerican Funding" to allow the reader to identify information applicable only to MidAmerican Funding. 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 historical unaudited Financial Statements and Notes to Financial Statements in Item 1 of this Form 10-Q. MidAmerican Energy's and MidAmerican Funding's actual results in the future could differ significantly from the historical results.

Results of Operations for the Third Quarter and First Nine Months of 2015 and 2014

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the third quarter of 2015 was $234 million, an increase of $64 million, or 38%, compared to 2014 due to higher regulated electric margins of $60 million, substantially from changes in electric retail rates and rate structure, warmer temperatures and lower energy costs, higher recognized production tax credits of $29 million and other income tax benefits, partially offset by higher depreciation and amortization of $13 million due to wind-powered generation and other plant placed in service and lower AFUDC of $8 million.

MidAmerican Energy's net income for the first nine months of 2015 was $459 million, an increase of $100 million, or 28%, compared to 2014 due to higher regulated electric margins of $111 million primarily from changes in electric retail rates and rate structure, lower energy costs and higher transmission revenue related to MidAmerican Energy's Multi-Value Projects ("MVPs"), higher recognized production tax credits of $45 million, lower fossil-fueled generation maintenance of $19 million due to planned outages in 2014, and a one-time refund of $8 million to customers in 2014 of insurance recoveries related to environmental matters, partially offset by higher depreciation and amortization of $42 million due to wind-powered generation and other plant placed in-service, lower AFUDC of $20 million, lower nonregulated margins of $7 million largely related to regulated gas wholesale sales and lower regulated gas margins of $5 million primarily from colder than normal winter temperatures in 2014.

MidAmerican Funding -

MidAmerican Funding's net income for the third quarter of 2015 was $231 million, an increase of $63 million, or 38%, compared to 2014 and, for the first nine months of 2015, was $459 million, an increase of $106 million, or 30%, compared to 2014. In addition to the changes in MidAmerican Energy's earnings discussed above, MidAmerican Funding recognized an $8 million after-tax gain on the sale of an investment in a generating facility lease in the first quarter of 2015.

Regulated Electric Gross Margin

A comparison of key operating results related to regulated electric gross margin is as follows:



Third Quarter			First Nine Months
2015	2014	Change

MIDAMERICAN ENERGY CO 10-Q