REGULATORY ACTIONS

NPC and SPPC follow deferred energy accounting. See Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2012 Form 10-K for additional information regarding deferred energy accounting by the Utilities.

The following deferred energy amounts were included in the consolidated balance sheets as of September 30, 2013 (dollars in thousands):



	September 30, 2013
	NVE Total			NPC Electric			SPPC Electric			SPPC Gas
Deferred Energy
Cumulative Deferred Balance authorized in 2013 DEAA	$	(152,990	)	$	(102,227	)	$	(32,693	)	$	(18,070	)
2013 Amortization	111,977			69,288			23,695			18,994
2013 Deferred Energy Under Collections ⁽¹⁾	118,397			95,465			19,697			3,235
Deferred Energy Balance at September 30, 2013 - Subtotal	$	77,384		$	62,526		$	10,699		$	4,159
Reinstatement of deferred energy (effective 6/07, 10 years)	89,906			89,906			—			—
Total Deferred Energy	$	167,290		$	152,432		$	10,699		$	4,159

Current Assets
Deferred energy	$	82,235		$	68,391		$	10,322		$	3,522
Non-current Assets
Deferred energy	85,055			84,041			377			637
Total Net Deferred Energy	$	167,290		$	152,432		$	10,699		$	4,159


⁽¹⁾	These deferred energy under collections are subject to quarterly rate resets as discussed in Note 1, Summary of Significant Accounting Policies, Deferred Energy Accounting, of the Notes to the Financial Statements in the 2012 Form 10-K.

Pending Regulatory Actions

Nevada Power Company and Sierra Pacific Power Company

Joint Application for the merger between NVE and MEHC (MidAmerican Merger)

In July 2013, NVE and MEHC filed a joint application with the PUCN seeking the authorization of the MidAmerican Merger. Under Nevada law, the PUCN may not authorize the MidAmerican Merger unless it finds, among other things, that the transaction is “in the public interest”. If the PUCN does not issue a final order regarding the MidAmerican Merger within 180 days of the application filing date, the transaction will be deemed to be authorized. Based on the date of filing, the expected authorization date for the joint application between NVE and MEHC is January 2014. Hearings are scheduled for November 2013.

Joint Application of NPC and SPPC (One Company Merger Filing)

In May 2013, NPC and SPPC filed a joint application with the PUCN to consolidate the Utilities into a single jurisdictional utility. The joint application with the PUCN requested the following:


•	Authority to modify the legal and regulatory structures of NPC and SPPC by merging SPPC into NPC, effectively transferring all of SPPC’s assets and obligations to NPC, and renaming the surviving utility NVEOC;


•	Authority to transfer SPPC’s certificates of public convenience and necessity (CPCN) to NPC, and to modify the transferred CPCNs and NPC’s CPCN to reflect the name of the surviving utility, NVEOC; and


•	Authority to transfer all SPPC’s electric and gas utility assets, including electric generation assets, to NPC.

The PUCN may not authorize the One Company Merger unless it finds, among other things, that the proposed transaction is “in the public interest.” The PUCN is not bound by any statutory deadlines with respect to this application. Hearings were expected to begin in February 2014, but the Utilities are seeking to delay the proceedings to the second half of 2014.

Financing Application

Concurrent with the One Company Merger filing, NPC and SPPC filed a joint financing application with the PUCN. The application requested the PUCN to restate and review the Utilities’ existing unused authority and to assign and consolidate the unused authority under NVEOC. In addition, the application requests new authority of $705.0 million. The consolidated authority would give NVEOC authority to issue new debt of $1.1 billion and authority to refinance or redeem debt of $1.5 billion. The application does not seek a change to NPC’s and SPPC’s existing revolving credit facility authority of $1.3 billion and $600 million, respectively. The Utilities have requested that the financing application be consolidated with the One Company Merger filing. However, as the One Company Merger will not be approved prior to the December 31, 2013 expiration of NPC’s current financing authority, NPC requested that its current authority be extended, as well as additional authority to refinance debt of $255 million. In September 2013, the PUCN accepted a stipulation extending NPC’s existing financing authority until an order is issued in the One Company Merger filing.

Nevada Power Company

NPC 2013 DEAA, REPR, TRED, EEIR and EEPR Rate Filings

In March 2013, NPC filed an application for the PUCN to review fuel and purchased power transactions for the 12-month period ended December 31, 2012, and to reset the REPR, TRED, EEIR and EEPR rate elements. In September 2013, the PUCN issued an order disallowing approximately $1.1 million (pre-tax) in deferred energy costs, which NPC expensed as a regulatory disallowance for the three and nine month periods ended September 30, 2013 and correspondingly adjusted the deferred energy balance as reflected in the table above. In addition, the PUCN indicated in their order that EEIR revenue should not contribute to the Utilities earning more than their authorized ROR. As NPC earned in excess of its authorized ROR in 2012, the PUCN disallowed approximately $10.8 million in pre-tax EEIR revenues (including carrying charges) which was expensed as a regulatory disallowance for the three and nine month periods ended September 30, 2013. Furthermore, as a result of this order and NPC’s estimated 2013 ROR calculated to be in excess of its authorized ROR, NPC has recorded a provision for refund of $11.2 million pre-tax against operating revenues, representing all EEIR revenues recorded during the nine months ended September 30, 2013. The September PUCN order includes the following changes in revenue requirement (dollars in millions):



	Effective Date	Authorized Revenue Requirement			Present Revenue Requirement		$ Change in Revenue Requirement
Revenue Requirement Subject To Change:
REPR ⁽¹⁾	Oct. 2013	$	28.4		$	38.7	$	(10.3	)
TRED ⁽¹⁾	Oct. 2013	15.7			15.9		(0.2		)
EEPR Base ⁽¹⁾	Oct. 2013	45.9			32.6		13.3
EEPR Amortization ⁽¹⁾	Oct. 2013	(29.9		)	9.0		(38.9		)
EEIR Base ⁽²⁾	Oct. 2013	15.1			10.6		4.5
EEIR Amortization ⁽³⁾	Oct. 2013	(17.2		)	10.7		(27.9		)
Total Revenue Requirement		$	58.0		$	117.5	$	(59.5	)


⁽¹⁾	Represents programs that require the Utilities to collect funds from customers for which the related costs are equal to the revenues collected. As a result, such programs have no effect on Operating or Net Income.


⁽²⁾	The authorized revenue requirement for EEIR Base may be subject to refund based on the PUCN order discussed above if NPC earns in excess of its authorized ROR. In future periods, NPC may record a provision against revenues to the extent its estimated ROR exceeds its authorized ROR.


⁽³⁾	Amounts related to the EEIR revenue disallowance, discussed above, are required to be refunded back to ratepayers through negative EEIR amortization; however, while these amounts will affect cash flow, they will not have a future impact on revenues, as the disallowance was recognized as of September 30, 2013.

Sierra Pacific Power Company

SPPC Electric General Rate Case

In June 2013, SPPC filed its statutorily required GRC for its Nevada electric operations and updated the filing in August 2013. In the updated filing, SPPC is requesting the following:


•	Decrease in general rates by $4.7 million, approximately a 0.7% decrease; and


•	ROE and ROR of 10.4% and 7.74%, respectively.

Hearings are scheduled for October 2013 and, if approved, the new rates would be effective January 1, 2014.

SPPC Gas General Rate Case

In June 2013, SPPC filed a GRC for its gas operations and updated the filing in August 2013. In the updated filing, SPPC is requesting the following:


•	Increase in general rates by $6.0 million, approximately a 6.1% increase; and


•	ROE and ROR of 10.35% and 7.72%, respectively.

Hearings are scheduled for October 2013 and, if approved, the new rates would be effective January 1, 2014.

SPPC 2013 Electric DEAA, REPR, TRED, EEIR and EEPR Rate Filings

In March 2013, SPPC filed an application for the PUCN to review fuel and purchased power transactions for the 12-month period ended December 31, 2012, and to reset the REPR, TRED, EEPR and EEIR rate elements. In September 2013, the PUCN issued an order disallowing approximately $0.1 million (pre-tax) in deferred energy costs, which SPPC expensed as a regulatory disallowance for the three and nine month periods ended September 30, 2013 and correspondingly adjusted the deferred energy balance as reflected in the table above. In addition, with respect to the EEIR disallowance discussed above under NPC, the PUCN disallowed $5.5 million (pre-tax) of SPPC's 2012 EEIR revenues, (including carrying charges) as a result of earning in excess of its authorized ROR. As a result $5.5 million was expensed as a regulatory disallowance for the three and nine months ended September 30, 2013. Also, similar to NPC, SPPC’s estimated 2013 ROR is calculated to be in excess of its authorized ROR, as such, SPPC has recorded a provision for refund of $4.0 million pre-tax against operating revenues, representing all EEIR revenues recorded during the nine months ended September 30, 2013. The September PUCN order includes the following changes in revenue requirement (dollars in millions):



	Effective Date	Authorized Revenue Requirement			Present Revenue Requirement		$ Change in Revenue Requirement
Revenue Requirement Subject To Change:
REPR ⁽¹⁾	Oct. 2013	$	42.3		$	44.4	$	(2.1	)
TRED ⁽¹⁾	Oct. 2013	7.4			6.3		1.1
EEPR Base ⁽¹⁾	Oct. 2013	6.0			5.6		0.4
EEPR Amortization ⁽¹⁾	Oct. 2013	(2.1		)	1.8		(3.9		)
EEIR Base ⁽²⁾	Oct. 2013	5.5			4.7		0.8
EEIR Amortization ⁽³⁾	Oct. 2013	(3.7		)	1.9		(5.6		)
Total Revenue Requirement		$	55.4		$	64.7	$	(9.3	)


⁽¹⁾	Represents programs that require the Utilities to collect funds from customers for which the related costs are equal to the revenues collected. As a result, such programs have no effect on Operating or Net Income.


⁽²⁾	The authorized revenue requirement for EEIR Base may be subject to refund based on the PUCN order discussed above if SPPC earns in excess of its authorized ROR. In future periods, SPPC may record a provision against revenues to the extent its estimated ROR exceeds its authorized ROR.


⁽³⁾	Amounts related to the EEIR revenue disallowance, discussed above, are required to be refunded back to ratepayers through negative EEIR amortization; however, while these amounts will affect cash flow, they will not have a future impact on revenues, as the disallowance was recognized as of September 30, 2013.

SPPC 2013 Nevada Gas DEAA and REPR Rate Filings

In March 2013, SPPC filed an application for the PUCN to review the physical gas, transportation and financial gas transactions that were recorded during the 12-month period ended December 31, 2012 and to reset the REPR. DEAA amounts subject to prudency review for cumulative balances as of December 31, 2012 are included in the deferred energy table above. In September 2013, the PUCN issued an order resulting in an overall decrease in revenue requirement of $0.2 million.

FERC Matters

NPC

NPC 2012 FERC Transmission Rate Case

In October 2012, NPC filed an application with the FERC to reset transmission and ancillary service rates that were last set in 2003. In December 2012, FERC issued an order which suspended the proposed rate increases until June 1, 2013. Furthermore, as requested in the filing, the FERC accepted two proposed rate decreases effective January 1, 2013. All rates are currently subject to refund and final approval by the FERC. However, at this time management is unable to determine the final revenue impact of the case.

SPPC

SPPC 2012 FERC Transmission Rate Case

In October 2012, SPPC filed an application with the FERC to reset transmission and ancillary service rates that were last set in 2007 and 2003, respectively. In December 2012, FERC issued an order which suspended certain rate increases until June 1, 2013. Furthermore, as requested in the filing, the FERC accepted two proposed rate decreases effective January 1, 2013. On June 17, 2013, SPPC filed an unopposed settlement agreement resolving all issues with the FERC, for approval for rates effective June 1, 2013. FERC approved the settlement on August 29, 2013. The rate changes under the terms of the settlement agreement are expected to result in an overall annual revenue increase of $1.5 million.

NVE, NPC and SPPC

2013 FERC Transmission Rate Case

In May 2013, NPC and SPPC filed an application with the FERC to reset transmission and ancillary service rates effective on the later of January 1, 2014, or the ON Line in-service date. The rate changes reflect the addition of the ON Line in the transmission revenue requirement. Various intervenors filed protests and NPC and SPPC filed a response to those protests on July 16, 2013. On August 5, 2013, FERC issued an order which suspended the rate changes until January 1, 2014 or the in-service date for ON Line, subject to refund. On August 12, 2013 the FERC designated a Settlement Judge and the matter is now in settlement proceedings. At this time, management is unable to determine the final revenue impact of the case.

FERC One Company Merger Request

In May 2013, NVE, NPC and SPPC filed an application with the FERC under Section 203 of the Federal Power Act for Approval of Internal Reorganization. In their request, NPC and SPPC requested FERC authorization for an internal corporate reorganization under which SPPC will merge into NPC and the surviving entity will be renamed NVEOC. On October 21, 2013, NVE, NPC and SPPC submitted an informational filing with FERC indicating that given the status of an application pending before the PUCN, the applicants did not object to FERC deferring its consideration of the application. The application remains pending before FERC for consideration.

FERC MidAmerican Merger Request

On July 12, 2013, an application was filed with the FERC under Section 203 of the Federal Power Act, to approve the MidAmerican Merger. The MidAmerican Merger is discussed in more detail in Note 2, Merger-Related Activities. Under Section 203 of the Federal Power Act, the FERC may not authorize the MidAmerican Merger unless it finds, among other things, that the transaction is “consistent with the public interest”. If the FERC does not grant or deny the application within 180 days after the application was filed, the application is deemed granted unless the FERC finds that further consideration, for a period not to exceed an additional 180 days, is required to determine whether the transaction meets the specified standards. The application requests authorization of the proposed transaction by December 19, 2013; however, NVE is unable to determine the timing of a decision in the filing.