STIPULATION AND AGREEMENT Dated March 23, 2007 Article I Introduction

The Wind IV Iowa Projects will be allocated to Iowa in the same manner as the Greater Des Moines Energy Center, Council Bluffs Energy Center Unit No. 4, and authorized prior wind projects that were addressed in Dockets SPU-

05-9 and SPU-05-12.

Each Wind IV Iowa Project that, at a minimum, is projected to earn its revenue requirement, including its allowed cost of capital shall qualify for rate treatment under these ratemaking principles.  In order to determine if a project so qualifies, a conventional revenue requirement will be calculated for each proposed project, levelized and then converted to a cents per kWh basis.  In turn, the incremental benefits (revenues) of the project, converted to a comparable cents per kWh basis, will be subtracted from the revenue requirement.  If the net result is a positive cents per kWh (i.e., the costs exceed the benefits), the project will be deemed to not earn its revenue requirement and will not qualify for rate treatment under these ratemaking principles.  On the other hand, if the net result is zero or a negative cents per kWh (i.e., the benefits equal or exceed the costs), the project will be deemed to earn its revenue requirement and will qualify for rate treatment under these ratemaking principles.  MidAmerican will perform the above-mentioned economic test in good faith using reasonable estimates of projected costs and other reasonable assumptions and the test will be completed prior to the decision to construct a project at any particular site or sites.

 

In the event that actual capital costs of a Wind IV Iowa Project are lower than the projected capital costs, rate base shall consist of actual costs.  In the event that actual capital costs exceed the capital expenditures that would result in the economic evaluation greater than zero as defined in the above paragraph, MidAmerican shall be required to establish the prudence and reasonableness of such excess before it can be included in rates.

The ratemaking principles shall be applicable to all new wind capacity up to 540 MW placed into service on or before December 31, 2013, and not currently in service, except for the 123 MW Pomeroy Project currently under development, which is being completed under ratemaking principles approved in Docket No. RPU-05-4.

The depreciation life of each Wind IV Iowa Project for ratemaking purposes shall be 20 years.

The allowed return on common equity investment (ROE) on the portion of the Wind IV Iowa Projects included in Iowa electric rate base shall be 11.7%.

The Iowa jurisdictional portion of any revenues from the sale of renewable energy credits, carbon dioxide credits or other environmentally related benefits associated with each Wind IV Iowa Project shall be recorded above-the-line, in FERC accounts 456 and 411.8, by MidAmerican, through the 20-year depreciation life of such Projects (and thereafter as ordered by the Board in a contested case proceeding), and for the duration of the Stipulation and Settlement in Docket No. RPU-03-1, such revenues and benefits shall be recorded in the accounts specified in Appendix 2 and included in the revenue sharing calculations of items “g” and “h” of, the Stipulation and Settlement in that docket.

The Iowa jurisdictional portion of any federal production tax credits associated with each Wind IV Iowa Project shall be recorded above-the-line, in FERC account 409.1, by MidAmerican, through the 20-year depreciation life of such Projects (and thereafter as ordered by the Board in a contested case proceeding), and for the duration of the Stipulation and Settlement in Docket No. RPU-03-1, such federal production tax credits shall be recorded in the accounts specified in Appendix 2 and included in the revenue sharing calculations of items “g” and “h” of the Stipulation and Settlement in that docket.

Through the revenue sharing calculation for calendar year 2013, the Iowa jurisdictional portion of wholesale sales revenue associated with all generating units included in MidAmerican’s Iowa jurisdictional electric rate base (including the Wind IV Iowa Projects) shall be recorded above-the-line in the accounts specified in Appendix 2 and included in the revenue sharing calculations of items “g” and “h” of the Stipulation and Settlement in Docket No. RPU-03-1.  Thereafter, the ratemaking treatment of the Iowa jurisdictional portion of wholesale sales revenue associated with all generating units included in MidAmerican’s Iowa jurisdictional electric rate base (including the Wind IV Iowa Projects) shall be determined by the Board in a contested case proceeding.

The Iowa jurisdictional portion of any revenues from the sale of renewable energy credits, carbon dioxide credits or other environmentally related benefits associated with each wind power generation project covered by settlements approved by the Board in Docket Nos. RPU-05-4, RPU-04-3, RPU-03-1 shall be recorded above-the-line, in accounts 456 and 411.8, by MidAmerican, through the 20-year depreciation life of such projects (and thereafter as ordered by the Board in a contested case proceeding), and for the duration of the Stipulation and Settlement in Docket No. RPU-03-1, such revenues and benefits shall be recorded in the accounts specified in Appendix 2 and included in the revenue sharing calculations of items “g” and “h” of the Stipulation and Settlement in that docket.

The Iowa jurisdictional portion of any federal production tax credits associated with each wind power generation project covered by settlements approved by the Board in Docket Nos. RPU-05-4, RPU-04-3, RPU-03-1 shall be recorded above-the-line, in FERC account 409.1, by MidAmerican, through the 20-year depreciation life of such projects (and thereafter as ordered by the Board in a contested case proceeding), and for the duration of the Stipulation and Settlement in Docket No. RPU-03-1, such federal production tax credits shall be recorded in the accounts specified in Appendix 2 and included in the revenue sharing calculations of items “g” and “h” of the Stipulation and Settlement in that docket.

Subject to the conditional exit explained below, neither MidAmerican nor the OCA shall seek or support a non-revenue neutral electric rate change to become effective prior to January 1, 2014.

Subject to the modifications described below, revenue sharing as approved by the Board in Docket No. RPU-03-01 for the years 2006-2010 shall apply in 2013.  The customer portion of any revenue sharing benefits generated with respect to the 2013 revenue sharing year shall be used to reduce the Iowa jurisdictional portion of the investment in the Wind IV Iowa Projects.

MidAmerican shall be released from its obligation not to seek or support a non-revenue neutral electric rate change to become effective prior to January 1, 2014, only in the event its projected return on equity for 2013 would be below 10% with such projection to be based upon its 2011 actual Iowa jurisdictional electric cost of service plus pro forma adjustments (to cost of service, rate base, revenues, etc.), including pro forma adjustments to achieve a reasonable, representative and recurring level of wholesale margins.  In the rate case contemplated above, MidAmerican’s wholesale margins pro forma adjustments shall not include any sharing between customers and shareholders of such wholesale margins, and all such reasonable, representative and recurring margins shall be shall be recorded above-the-line, in MidAmerican’s proposals in such proceeding. In the event MidAmerican seeks such a rate change as a result of this condition occurring, then in such rate case there shall be no limitations or requirements with respect to the positions that may be taken by the OCA and MidAmerican, except that the OCA and MidAmerican shall be required to honor their settlement obligations as approved and ordered in this and in the prior Board ratemaking principles determinations, and other stipulations/agreements between the OCA and MidAmerican.

In the event MidAmerican receives Board approval to increase Iowa electric rates effective in 2013, the revenue sharing arrangement currently in effect shall apply in 2013, subject to the following modifications:

i) All Iowa jurisdictional electric operating income, if any, that exceeds the combined allowed return on common equity established in the rate case (i.e. the allowed rates of return applicable from ratemaking principle decisions and all other rate base weighted as a percentage of total rate base) shall be subject to revenue sharing.

ii) The revenue sharing formula shall be as follows: 83.3% of operating income subject to revenue sharing shall be used to offset Wind IV Iowa Projects rate base and the remaining 16.7% of operating income shall be retained by MidAmerican.

iii) 100% of the Iowa jurisdictional portion of wholesale electric margins shall be accounted for above-the-line for purposes of these revenue sharing calculations.

Subject to regulatory approval, effective January 1, 2007, through December 31, 2013 (or December 31, 2012 in the event there is a rate increase in 2013), there shall be a reduction in decommissioning funding from the 2006 level of $8,299,012 deposited annually into the Quad Cities Nuclear Power Stations’ decommissioning trusts funds to a new decommissioning funding level, effective January 1, 2007, of $1,595,964.  The remaining difference, of $6,703,048 shall be used to reduce east and south residential base rates in 2008, to $.089/kWh and to reduce east and south residential base rates in 2009 to $.088/kWh as approved by the Board in Docket No. RPU-04-2, or as ultimately required by subsequent Board order.  To the extent the amount of the above-mentioned reduction in funds contributed annually to the decommissioning trusts funds exceeds the amount needed to implement the Board-approved rate-reductions for south and east zones for residential customers, 100 percent of the remaining amount shall be used, during 2007-2013 (or 2007 - 2012 in the event there is a rate increase in 2013), to reduce the Wind IV Iowa Projects investment in rate base (including AFUDC) or the investment in Council Bluffs Energy Center Unit No. 4 plant (including AFUDC), whichever has the highest ROE.

/s/  Dean A. Crist

/s/  John R. Perkins

Name:  Dean A. Crist

Name:  John R. Perkins 

Date:  March 23, 2007

Date:  March 23, 2007