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These costs are included in energy costs on the Consolidated Statements of Operations. PacifiCorp is required to pay its portion of operating costs and its portion of the debt service, whether or not any electricity is produced. These arrangements accounted for less than 5% of PacifiCorp's 2013, 2012 and 2011 energy sources.
PacifiCorp has "take or pay" coal and natural gas contracts that require minimum payments.
Construction Commitments PacifiCorp's construction commitments included in the table above relate to firm commitments and include costs associated with investments in emissions control equipment and certain transmission projects.
PacifiCorp has agreements for the right to transmit electricity over other entities' transmission lines to facilitate delivery to PacifiCorp's customers.
PacifiCorp has non-cancelable operating leases primarily for certain operating facilities, office space, land and equipment that expire at various dates through the year ending December 31, 2092. These leases generally require PacifiCorp to pay for insurance, taxes and maintenance applicable to the leased property. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. PacifiCorp also has non-cancelable easements for land on which its wind-powered generating facilities are located. Rent expense totaled $16 million for 2013, $14 million for 2012 and $18 million for 2011.
Guarantees PacifiCorp has entered into guarantees as part of the normal course of business and the sale of certain assets. These guarantees are not expected to have a material impact on PacifiCorp's consolidated financial results.
(14) Preferred Stock
In 2013, PacifiCorp redeemed and canceled all remaining outstanding shares of its redeemable preferred stock at stated redemption prices, which in aggregate totaled $40 million, plus accrued and unpaid dividends.
In the event of voluntary liquidation, all preferred stock is entitled to stated value or a specified preference amount per share plus accrued dividends. Upon involuntary liquidation, all preferred stock is entitled to stated value plus accrued dividends. Dividends on all preferred stock are cumulative. Holders also have the right to elect members to the PacifiCorp Board of Directors in the event dividends payable are in default in an amount equal to four full quarterly payments.
Dividends declared but not yet due for payment on preferred stock were $- million and $1 million as of December 31, 2013 and 2012, respectively.
PacifiCorp also has 16 million shares of No Par Serial Preferred Stock authorized, but no shares were issued or outstanding as of December 31, 2013 and 2012.
(15) Common Shareholder's Equity In February 2014, PacifiCorp declared a dividend of $500 million payable to PPW Holdings in March 2014.
Through PPW Holdings, MEHC is the sole shareholder of PacifiCorp's common stock. The state regulatory orders that authorized MEHC's acquisition of PacifiCorp contain restrictions on PacifiCorp's ability to pay dividends to the extent that they would reduce PacifiCorp's common equity below specified percentages of defined capitalization. As of December 31, 2013, the most restrictive of these commitments prohibits PacifiCorp from making any distribution to PPW Holdings or MEHC without prior state regulatory approval to the extent that it would reduce PacifiCorp's common equity below 44% of its total capitalization, excluding shortterm debt and current maturities of long-term debt. The terms of this commitment treat 50% of PacifiCorp's remaining balance of preferred stock in existence prior to the acquisition of PacifiCorp by MEHC as common equity. As of December 31, 2013, PacifiCorp's actual common equity percentage, as calculated under this measure, was 54.1%, and PacifiCorp would have been permitted to dividend $2.6 billion under this commitment.
These commitments also restrict PacifiCorp from making any distributions to either PPW Holdings or MEHC if PacifiCorp's senior unsecured debt rating is BBB- or lower by Standard & Poor's Rating Services or Fitch Ratings or Baa3 or lower by Moody's Investor Service, as indicated by two of the three rating services. As of December 31, 2013, PacifiCorp met the minimum required senior unsecured debt ratings for making distributions.
PacifiCorp is also subject to a maximum debt-to-total capitalization percentage under various financing agreements as further discussed in Note 6.
(16) Components of Accumulated Other Comprehensive Loss, Net Accumulated other comprehensive loss, net consists of unrecognized amounts on retirement benefits, net of tax, of $9 million and $12 million as of December 31, 2013 and 2012, respectively.
(17) Variable-Interest Entities PacifiCorp holds an undivided interest in 50% of the Hermiston generating facility (refer to Note 4), dictates when the generating facility operates, procures 100% of the natural gas for the generating facility and subsequently receives 100% of the generated electricity, 50% of which is acquired through a long-term power purchase agreement. As a result, PacifiCorp holds a variable interest in the joint owner of the remaining 50% of the facility and is the primary beneficiary. PacifiCorp has been unable to obtain the information necessary to consolidate the entity because the entity has not agreed to supply the information due to the lack of a contractual obligation to do so. PacifiCorp continues to request from the entity the information necessary to perform the consolidation; however, no information has yet been provided by the entity. Cost of the electricity purchased from the joint owner was $38 million during the year ended December 31, 2013 and $37 million during each of the years ended December 31, 2012 and 2011. The entity is operated by the equity owners and PacifiCorp has no risk of loss in relation to the entity in the event of a disaster.
PacifiCorp holds a two-thirds interest in Bridger Coal Company ("Bridger Coal"), which supplies coal to the Jim Bridger generating facility that is owned two-thirds by PacifiCorp and one-third by PacifiCorp's joint venture partner in Bridger Coal. PacifiCorp purchases two-thirds of the coal produced by Bridger Coal, while the remaining coal is purchased by the joint venture partner.
The power to direct the activities that most significantly impact Bridger Coal's economic performance are shared with the joint venture partner. Each joint venture partner is joint and severally liable for the obligations of Bridger Coal. Bridger Coal's necessary working capital to carry out its mining operations is financed by contributions from PacifiCorp and its joint venture partner.
PacifiCorp's equity investment in Bridger Coal was $178 million and $187 million as of December 31, 2013 and 2012, respectively.
Refer to Note 18 for information regarding related-party transactions with Bridger Coal.
(18) Related-Party Transactions PacifiCorp has an intercompany administrative services agreement with MEHC and its subsidiaries. Amounts charged to PacifiCorp by MEHC and its subsidiaries under this agreement totaled $17 million, $15 million and $16 million during the years ended December 31, 2013, 2012 and 2011, respectively. Payables associated with these administrative services were $3 million and $1 million as of December 31, 2013 and 2012, respectively. Amounts charged by PacifiCorp to MEHC and its subsidiaries under this agreement totaled $9 million, $3 million and $2 million during the years ended December 31, 2013, 2012 and 2011, respectively. Receivables associated with these administrative services were $2 million and $1 million as of December 31, 2013 and 2012, respectively.
PacifiCorp also engages in various transactions with several subsidiaries of MEHC in the ordinary course of business. Services provided by these subsidiaries in the ordinary course of business and charged to PacifiCorp relate to the transportation of natural gas and relocation services. These expenses totaled $5 million during the years ended December 31, 2013 and 2012 and $6 million during the year ended December 31, 2011. Payables associated with these services were $- million and $1 million as of December 31, 2013 and 2012, respectively.
PacifiCorp has long-term transportation contracts with BNSF Railway Company ("BNSF"), an indirect wholly owned subsidiary of Berkshire Hathaway, PacifiCorp's ultimate parent company. Transportation costs under these contracts were $32 million, $34 million and $33 million during the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013 and 2012, PacifiCorp had $2 million of accounts payable to BNSF outstanding under these contracts, including indirect payables related to a jointly owned facility.
PacifiCorp participated in a captive insurance program provided by MEHC Insurance Services Ltd. ("MEISL"), a wholly owned subsidiary of MEHC. MEISL covered all or significant portions of the property damage and liability insurance deductibles in many of PacifiCorp's policies, as well as overhead distribution and transmission line property damage. The policy coverage period expired on March 20, 2011 and was not renewed. Premium expenses were $2 million during the year ended December 31, 2011.
Receivables for claims were $2 million as of December 31, 2013 and 2012. Proceeds from claims were $1 million, $6 million and $16 million during the years ended December 31, 2013, 2012 and 2011, respectively.
PacifiCorp is party to a tax-sharing agreement and is part of the Berkshire Hathaway United States federal income tax return.
Federal and state income taxes payable to MEHC were $22 million and $48 million as of December 31, 2013 and 2012, respectively.
For the year ended December 31, 2013, cash paid for federal and state income taxes to MEHC totaled $120 million. For the years ended December 31, 2012 and 2011, cash received for federal and state income taxes from MEHC totaled $215 million and $425 million, respectively.
PacifiCorp transacts with its equity investees, Bridger Coal and Trapper Mining Inc. During the years ended December 31, 2013, 2012 and 2011, PacifiCorp charged Bridger Coal $2 million, $1 million and $2 million, respectively, for administrative support and management services provided by PacifiCorp to Bridger Coal. Receivables for these services, as well as for certain expenses paid by PacifiCorp and reimbursed by Bridger Coal, were $4 million and $6 million as of December 31, 2013 and 2012, respectively.
Services provided by equity investees and charged to PacifiCorp primarily relate to coal purchases. During the years ended December 31, 2013, 2012 and 2011, coal purchases from PacifiCorp's equity investees totaled $152 million, $144 million and $126 million, respectively. Payables to PacifiCorp's equity investees were $23 million and $18 million as of December 31, 2013 and 2012, respectively.
(19) Supplemental Cash Flow Disclosures
The summary of supplemental cash flow disclosures as of and for the years ended December 31 is as follows (in millions):
Disclosure Controls and Procedures At the end of the period covered by this Annual Report on Form 10-K, PacifiCorp carried out an evaluation, under the supervision and with the participation of PacifiCorp's management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of PacifiCorp's disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended).
Based upon that evaluation, PacifiCorp's management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), concluded that PacifiCorp's disclosure controls and procedures were effective to ensure that information required to be disclosed by PacifiCorp in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to management, including PacifiCorp's Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There has been no change in PacifiCorp's internal control over financial reporting during the quarter ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, PacifiCorp's internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
Management of PacifiCorp is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Under the supervision and with the participation of PacifiCorp's management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), PacifiCorp's management conducted an evaluation of the effectiveness of PacifiCorp's internal control over financial reporting as of December 31, 2013 as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this assessment, PacifiCorp's management used the criteria set forth in the framework in "Internal Control - Integrated Framework (1992)" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation conducted under the framework in "Internal Control - Integrated Framework (1992)," PacifiCorp's management concluded that PacifiCorp's internal control over financial reporting was effective as of December 31, 2013.
PacifiCorp March 3, 2014 Item 9B. Other Information None.
Item 10. Directors, Executive Officers and Corporate Governance PacifiCorp is an indirect subsidiary of MEHC, and its directors consist of executive management from both MEHC and PacifiCorp.