20160421Notice of Activity.pdf

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April2l, 2016
VA OVERNIGHT DELIWRY
Idaho Public Utilities Commission
472 W . Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Attention: Jean D. Jewell
Commission Secretary
1107 W. North Temple, Suite 310
Salt Lake Cily, aT 84116
ITECEIVED
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RE: Notice of Activity Involving Berkshire Hathaway Enerry Company,
formerly known as MidAmerican Enerry Holdings Company - Investment
in Grid Assurance.
Please be advised of the following activity conceming Berkshire Hathaway Energy Company
("BHE"), formerly known as MidAmerican Energy Holdings Company ("MEHC").
Case No. PAC-E-05-08, merger commitmentl-L7, provides that "PacifiCorp or MEHC will
notifu the Commission in writing prior to implementation of plans by PacifiCorp or MEHC...to
form an affiliate for the purpose of transacting business with PacifiCorp's regulated
operations..."
As described in more detail below, BHE U.S. Transmission, LLC ("BHEUST"), a wholly-owned
subsidiary of BHE, intends to become aminority equity owner in a new entity, Grid Assurance,
LLC ("Grid Assurance") on or about April27,2016. Grid Assurance plans to own, store and
maintain critical, long lead-time transmission-related equipment, such as transformers, at secure,
strategically located warehouses. Grid Assurance would also offer logistics support to facilitate
the expedited movement of such equipment to affected transmission sites following qualifying
events, such as weather-related transmission outages. Once established by the initial investors,
Grid Assurance will offer the equipment to "subscribers" as and when needed, providing
expedited, cost-effective solutions for enhancing transmission grid resiliency and protecting
customers from prolonged transmission outages.
PacifiCorp has no equity ownership interests in Grid Assurance. Similarly, PacifiCorp is not
currently a Grid Assurance "subscriber," but PacifiCorp will evaluate the customer benefits and
legal and regulatory aspects of the subscription program, once it is fully rolled out. As such,
under merger commitmentl-t7, BHE (via BHEUST) could arguably be deemed to be "forming
an affrliate for the purpose of transacting business with PacifiCorp's regulated operations."
While BHE arguably is not directly "forming" the new entity, since it will only be a minority
investor together with several other entities as noted below, this written notice is provided out of
an abundance of caution and is intended to satisff the merger commitment.
Idaho Public Uti liti e s Commission
April2l,2016
Page 2
Background on Grid Assurance:
The Federal Energy Regulatory Commission ("FERC") issued a positive order March25,20l6,
to Grid Assurance that provides regulatory clarity supporting transmission-owning entities
participating in and subscribing to Grid Assurance as a way to strengthen transmission grid
resiliency. (See FERC Docket No. EL 16-20)
BHEUST intends to become a minority equity owner in Grid Assurance on April 27,2016.
Eight electric utilities and energy companies (not including PacifiCorp) announced on June 10,
2015 plans to form Grid Assurance. FERC initially recognized the benefits of Grid Assurance in
an August 7,2015, order. The Grid Assurance consortium subsequently developed a
Subscription Agreement and has received clarity from FERC in a declaratory order that enables
broader transmission owner participation. On March 25,2016, FERC issued a second, positive
order to Grid Assurance that provides regulatory clarity supporting transmission-owning entities
participating in and subscribing to Grid Assurance as a way to strengthen transmission grid
resiliency.
Grid Assurance expects to begin marketing this service to transmission owners (including
PacifiCorp) in the second quarter of 2016 with subscriber acceptance, warehouse specification
and inventory identification occurring over the next l8 months. Grid Assurance plans to own and
maintain critical, long lead-time equipment at secure, strategically located warehouses and offer
logistics support to facilitate the expedited movement of equipment to the affected sites
following qualifying events. Qualifuing events can include physical attacks, cyberattacks,
electromagnetic pulses, catastrophic events, solar storms, earthquakes and severe weather events.
Grid Assurance services are intended to complement transmission owners' existing programs as
well as established industry initiatives.
About Grid Assurance:
Affiliates of American Electric Power (NYSE:AEP), Berkshire Hathaway Energy (BHEUST),
Duke Energy (NYSE:DUK), Edison International (NYSE:EIX), Eversource Energy (NYSE:ES),
Exelon (NYSE:EXC), and Great Plains Energy (NYSE:GXP) are pursuing development of Grid
Assurance, a limited liability company, to offer subscribers cost-effective solutions for
enhancing transmission grid resiliency. Recovery of the transmission grid can be hampered by
long lead times required to build and deliver critical replacement equipment including large
transformers, circuit breakers and other specialized electrical equipment. Grid Assurance will
give subscribers economical access to critical equipment faster than traditionally possible.
About BHE U.S. Transmission, LLC:
BHEUST is committed to long-term ownership and acquisition of transmission assets, BHEUST
builds upon the significant operational and ownership experience gained by Berkshire Hathaway
Energy through its businesses' ownership of existing electric transmission systems. Because of
this experience, it is able to provide cost-effective, reliable transmission solutions for wholesale
customers.
Idaho Public Utilitie s Commission
Apil2l,2A16
Page 3
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Affairs Manager
at [phone].
Very truly yours,
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Jeffrey K. Larsen
Vice President, Regulation