Berkshire Hathaway Energy Company

11/09/2026 | Press release | Distributed by Public on 11/09/2026 05:01

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of EGTS during the periods included herein. This discussion should be read in conjunction with EGTS' historical Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. EGTS' actual results in the future could differ significantly from the historical results.
Results of Operations for the Third Quarter and First Nine Months of 2026 and 2025
Overview
Net income for the third quarter of 2026 was $61 million, an increase of $10 million compared to 2025. Net income increased primarily due to higher margin from regulated gas transmission and storage operations of $9 million.
Net income for the first nine months of 2026 was $231 million, an increase of $42 million compared to 2025. Net income increased primarily due to higher margin from regulated gas transmission and storage operations of $39 million and a gain from an agreement to convey development rights underneath one of its natural gas storage fields.
Quarter Ended September 30, 2026, Compared to Quarter Ended September 30, 2025
Operating revenue increased $8 million, or 3%, for the third quarter of 2026 compared to 2025, primarily due to an increase in regulated gas transmission and storage services revenue of $4 million, primarily due to additional capacity contracts, an increase in variable revenue related to park and loan activity of $2 million and an increase in services provided to affiliates of $2 million (fully offset in operations and maintenance expense).
Income tax expense increased $1 million, or 6%, for the third quarter of 2026 compared to 2025. The effective tax rate was 23% and 25% for the three-month periods ended September 30, 2026 and 2025, respectively. The $1 million increase was primarily due to higher pre-tax income.
First Nine Months of 2026 Compared to First Nine Months of 2025
Operating revenue increased $39 million, or 5%, for the first nine months of 2026 compared to 2025, primarily due to an increase in variable revenue related to park and loan activity of $12 million, an increase in services provided to affiliates of $10 million, an increase in royalties and other contingent fees from farmout agreements of $9 million and an increase in regulated gas transmission and storage services revenue of $9 million, primarily due to additional capacity contracts.
Operations and maintenance decreased $7 million, or 2%, for the first nine months of 2026 compared to 2025, primarily due to a gain from an agreement to convey development rights underneath one of its natural gas storage fields of $16 million and lower employee costs of $6 million, partially offset by an increase in services provided to affiliates of $10 million and an increase in charges from affiliates of $7 million.
Income tax expense increased $10 million, or 16%, for the first nine months of 2026 compared to 2025. The effective tax rate was 24% and 25% for the nine-month periods ended September 30, 2026 and 2025, respectively. The $10 million increase was primarily due to higher pre-tax income.
Liquidity and Capital Resources
As of September 30, 2026, EGTS' total net liquidity was as follows (in millions):
Cash and cash equivalents $ 8
Intercompany revolving credit agreement, maturing 2027
400
Less:
Notes payable to affiliates 40
Net intercompany revolving credit agreement 360
Total net liquidity $ 368
Operating Activities
Net cash flows from operating activities for the nine-month periods ended September 30, 2026 and 2025 were $412 million and $390 million, respectively. The change is primarily due to favorable operating results, partially offset by other working capital adjustments.
Investing Activities
Net cash flows from investing activities for the nine-month periods ended September 30, 2026 and 2025 were $(244) million and $(323) million, respectively. The change is primarily due to an increase in repayments of notes by Eastern Energy Gas under an intercompany revolving credit agreement of $285 million and proceeds from the assignment of shale development rights of $16 million, partially offset by an increase in capital expenditures of $206 million, an increase in notes issued to Eastern Energy Gas under an intercompany revolving credit agreement of $11 million and a decrease in proceeds from sales of marketable securities of $5 million.
Financing Activities
Net cash flows from financing activities for the nine-month period ended September 30, 2026 were $(176) million. Sources of cash totaled $40 million and consisted of net issuance of notes payable to Eastern Energy Gas under an intercompany revolving credit agreement. Uses of cash totaled $216 million and consisted of dividends paid to Eastern Energy Gas.
Net cash flows from financing activities for the nine-month period ended September 30, 2025 were $(37) million and consisted of dividends paid to Eastern Energy Gas.
Future Uses of Cash
EGTS has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, intercompany revolving credit agreements, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, investments, debt retirements and other capital requirements. The availability and terms under which EGTS has access to external financing depends on a variety of factors, including regulatory approvals, EGTS' credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the natural gas transmission and storage industry.
Capital Expenditures
Capital expenditure needs are reviewed regularly by management and may change significantly as a result of these reviews, which may consider, among other factors, new growth projects and the timing of growth projects; changes in environmental and other rules and regulations; impacts to customer rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital.
EGTS' historical and forecasted capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):
Nine-Month Periods Annual
Ended September 30, Forecast
2025 2026 2026
Natural gas transmission and storage $ 40 $ 113 $ 171
Other 148 281 385
Total $ 188 $ 394 $ 556
Natural gas transmission and storage includes primarily growth capital expenditures related to planned regulated projects. Other includes primarily pipeline integrity work, automation and controls upgrades, underground storage, corrosion control, unit exchanges, compressor modifications and projects related to Pipeline Hazardous Materials Safety Administration natural gas storage rules. The amounts also include EGTS' asset modernization program, which includes projects for vintage pipeline replacement, compression replacement, pipeline assessment and underground storage integrity.
Material Cash Requirements
As of September 30, 2026, there have been no material changes in cash requirements from the information provided in Item 7 of EGTS' Annual Report on Form 10-K for the year ended December 31, 2025.
Regulatory Matters
EGTS is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding EGTS' current regulatory matters.
Environmental Laws and Regulations
EGTS is subject to federal, state and local laws and regulations regarding air quality, climate change, emissions performance standards, water quality and other environmental matters that have the potential to impact its current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. EGTS believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and EGTS is unable to predict the impact of the changing laws and regulations on its operations and financial results.
Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.
Critical Accounting Estimates
Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, impairment of long-lived assets and income taxes. For additional discussion of EGTS' critical accounting estimates, see Item 7 of EGTS' Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in EGTS' assumptions regarding critical accounting estimates since December 31, 2025.
Berkshire Hathaway Energy Company published this content on November 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 09, 2026 at 11:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]