In this issue

Northern Ranks First Among all Interstate Pipelines in the Mastio & Company 2017 Customer Satisfaction Index

Consistently Cold This Winter

Modernization Update

FERC Action Regarding Income Taxes

New EG Option for Firm Deferred Delivery Service

Market Area Expansion Update

Field Area Expansion Update

Have you met…

Northern and Employees Help the Disadvantaged with Their Energy Bills

A Closing Note from Mark Hewett

“We are in business to serve our customers. Fairly. Efficiently. Reliably.”

NORTHERN NOTES | MARCH 2018

Northern’s headquarters in Omaha, Nebraska

Northern Ranks First Among all Interstate Pipelines in the Mastio & Company

2017 Customer Satisfaction Index Thanks to our customers’ ratings in the Mastio & Company’s 22nd Edition customer satisfaction survey, North-

ern has received the No. 1 ranking among 37 interstate pipelines in the U.S. For the tenth consecutive year,

Northern placed first in both the Mega Pipeline and Major Pipeline categories. Northern’s affiliated pipeline,

Kern River Gas Transmission Company, placed second. With these results, Northern and Kern River have

been ranked first or second for the last nine years of the survey – a remarkable demonstration of Berkshire

Hathaway Energy’s commitment to being the best in the industry and providing services that customers val-

ue.

“The entire company devotes a great deal of effort to make the business experi-

ence with Northern as positive and seamless as possible. This customer satisfaction

rating is a result of every organizational group within Northern working with one

common goal – providing outstanding custom-

er service,” said Kent Miller, vice president of

customer service and business development.

The Mastio & Company survey consists of 29

questions that Mastio refers to as attributes. The

following attributes are those on which Northern

scored highest in the survey.

Firm gas transportation is highly reliable

Scheduled gas volumes are accurate

Accuracy of invoices

Financial stability of the pipeline

“Every year Northern sets new customer satis-

faction goals that focus on meeting the specific

needs of its customers,” Miller said. “While we

will use the Mastio feedback to develop those

goals, they are also based on the direct com-

munication that we receive from our customers.

The goal of providing outstanding customer ser-

vice is never fully completed, and we will con-

tinue to find ways to add value to benefit our

customers.”

Mastio & Company is an independent market-

ing and management consulting firm specializing in industrial

consumer opinion research for a wide range of industries,

including natural gas pipelines. The ranking from this custom-

er survey process is the benchmark used by Northern to de-

termine its customer satisfaction standing among its peers.

Northern will continue its efforts to provide superior value to its customers. The graph above was supplied by

Mastio and illustrates Northern’s performance compared to its competitors.

Consistently Cold This Winter For the second time in five years, each month in the

winter season has averaged temperatures that are

colder than normal. The table to the right shows, by

month, the weighted system temperature variance

as a percentage to normal for the heating seasons

from 2013-2014 through the 2017-2018 winter sea-

son.

NORTHERN NOTES | PAGE 1

“Northern provides excellent service, is responsive, un-

derstands its business and anticipates customer needs.”

(Quote from a Northern customer responding to the Mas-

tio study)

NORTHERN NOTES | PAGE 2

(Consistently Cold This Winter — Continued from Pg. 1)

The cold weather began in earnest on Christ-

mas Day 2017, and was followed by 17 out of

the next 23 days with temperatures at 0 de-

grees Fahrenheit or below. Northern’s aver-

age Market Area deliveries during this time

period were approximately 4.6 Bcf/day. The

coldest month of the 2017-2018 heating sea-

son was February, when temperatures were

14% colder than normal, or approximately 7

degrees colder than normal, with average

market deliveries of approximately 3.9 Bcf/

day.

The graph to the right recaps the colder than

normal 2017-2018 heating season market area deliveries compared to the previous two heating seasons.

Northern recorded its top two highest market area peak delivery days in December 2017. On December 26,

2017, the market area delivery averaged 5.221 Bcf. On December 27, 2017, the market area delivery aver-

aged 5.164 Bcf. The previous highest recorded market area peak delivery was January 18, 2016, with an av-

erage of 5.158 Bcf. On December 31, 2017, the market area delivery averaged 5.020 Bcf and on January 1,

2018, market area deliveries averaged 5.067 Bcf,

making this the first time Northern has recorded deliv-

eries of four 5.0 Bcf days in a heating season.

Northern delivered 4.0 Bcf/day or more to its market

area on 35 days during the 2017-2018 heating sea-

son. This compares to 20 days of market area deliver-

ies of 4.0 Bcf/day or more during the 2016-2017 heat-

ing season.

The graph to the left shows Northern’s system-

weighted average temperature and loads for the

2016-2017 heating season.

Reliable performance by both customers and North-

ern were the hallmark this winter. On the record-

setting peak day of December 26, 2017, customer

systems performed reliably and Northern’s compres-

sor fleet provided 10.5 million horsepower-hours of

compression service, meeting all firm transportation

volume requirements. Throughout this challenging winter, the combined efforts of Northern and its customers

resulted in reliable service to the markets.

Modernization Update

Northern’s efforts to modernize its system proved beneficial during this cold weather period. A new compres-

sor unit that replaced an older unit at Beatrice, Nebraska, performed flawlessly and enhanced reliability to

Northern’s compressor fleet. Additionally, capacity replacement projects for the original A-line have allowed

Northern to lower pressures on this originally mechanically coupled pipeline, resulting in improved pipeline

reliability. Northern has numerous pipeline projects planned for this year to continue toward its long-term

goal of eventually abandoning more than 900 miles of Northern’s original mainline.

Northern is managing a $918 million asset modernization program over the next ten years. A significant por-

tion of the program is focused on abandoning its 1930’s vintage A-mainline. Approximately $475 million is

committed to abandoning the A-mainline and replacing the associated capacity. The program, which will

improve long-term system reliability, began in 2016, and is scheduled for completion in

2026.

“We will continue to invest in the pipeline in order to provide you highly

reliable service and to meet your future growth needs.”

NORTHERN NOTES | PAGE 3

(Modernization Update — Continued from Pg. 2)

In 2016 and 2017, Northern executed a number of pro-

jects to facilitate significant pressure reduction on its A-

mainline. The projects included the installation of more

than 16 miles of 20-, 30- and 36-inch-diameter pipeline in

Iowa and Minnesota.

In 2018, Northern is executing a series of projects to pre-

pare an A-mainline segment from Palmyra, Nebraska, to

Ogden, Iowa, for abandonment. The abandonment re-

quires Northern to file a Section 7(b) filing with the Federal

Energy Regulatory Commission; the filing is scheduled for

submission July 2018, with construction scheduled during

summer 2019. The project team is in the process of en-

gaging landowners and environmental permitting agen-

cies in preparation for the federal filing. Abandoning this

segment involves $15.1 million in capital expenditures. The

projects are on track for timely completion.

As Northern continues to invest close to $1 billion in the reliability and infrastructure modernization of its system, we have

communicated that our existing rates are insufficient to cover these incremental costs, and some form of rate action

would be necessary. However, the recently passed federal tax reform is expected to allow Northern to delay the rate

action in the near term, and to possibly accelerate infrastructure modernization investments, further improving the relia-

bility of Northern’s system to the benefit of Northern’s customers. Northern will continue to communicate with customers

regarding modernization results and the need for future rate actions to cover these costs, as conditions dictate.

“We are committed to making it easy to do business with us.”

Northern’s A-mainline replacement project under construction

FERC Action Regarding Income Taxes

On March 15, 2018, the Federal Energy Regulatory Commission issued two orders to address the impacts of the Tax Cuts

and Jobs Act of 2017. A notice of inquiry (FERC Docket No. RM18-12) seeks comment on accumulated deferred income

taxes and the exclusion of bonus depreciation under the new law. A notice of proposed rulemaking (Docket No. RM18-

11) would require all interstate natural gas pipelines to file a one-time informational report showing a calculation of the

impact of the new tax law. In addition to the report, interstate pipelines have four options: (1) take no action; (2) file a

statement explaining why a rate adjustment is not needed; (3) file a Natural Gas Act limited Section 4 filing to reduce

rates; or (4) make a commitment to file a general Section 4 rate case in the near future.

Also, the Commission, in PL17-1, said it will no longer allow pipelines owned by master limited partnerships (MLPs) to re-

cover an income tax allowance in cost of service rates. In response to a court remand, the Commission determined

that granting an income tax allowance, while also using the discounted cash flow methodology, which includes in-

come tax expenses to set a return on equity, results in double recovery of income taxes by an MLP. For the informational

filing proposed in Docket No. RM18-11, pipelines owned by MLPs may not include a tax allowance. Northern is a corpo-

ration; therefore, it is not impacted by this decision.

The Commission proposed a staggered schedule for pipelines to file the informational report, and Northern is listed in

the first group of pipelines; its report is due 28 days after the rulemaking is final. Pipelines are encouraged to communi-

cate with customers in advance of making any proposals to change rates based on the tax law changes. Any compa-

ny that files a Section 4 rate case or a pre-packaged uncontested settlement before the deadline for the informational

report will be exempt from filing the informational report. Each report will be docketed, and interested parties will be

able to file comments for the Commission to consider. For pipelines that do not file a limited Section 4 rate case or com-

mit to file a Section 4 rate case in the future, the Commission will consider whether to initiate a Section 5 rate case.

Since 2015, Northern has been communicating to customers regarding the need to modernize its infrastructure, which

will ultimately require a rate increase. However, Northern’s customers will benefit from tax reform through deferral of a

rate case as a reduction in tax costs will partially offset the cost of modernization. Northern will readily comply with the

Commission’s requirements and will explain and document for the Commission the benefits of tax reform to Northern’s

customers through the expected deferral of a rate increase.

NORTHERN NOTES | PAGE 4

“Northern will continue to invest in the pipeline in or-

der to meet the growth needs of our customers.” Market Area Expansion Update

2007 through 2017

Since 2007, Northern has invested approximately $570 million, and added approximately 1.2 Bcf/day of pipeline ca-

pacity to serve our customers’ growth needs in the Market Area.

In 2017, Northern constructed the Northern Lights 2017 Expansion project, and placed into service 76,000 Dth/day of

capacity in the Market Area. Northern invested $70 million in the project. The project included approximately 4.8 miles

of 8-inch-diameter and 12-inch-diameter pipeline loop extensions in Sherburne and Isanti counties, Minnesota, and a

15,900-horsepower compressor unit at Northern’s existing Faribault compressor station in Rice County, Minnesota. The

new facilities and associated firm capacity resulted from Northern’s open season for Northern Lights 2017 Expansion –

Ventura North.

2018 – 2019

In 2018, Northern will construct a new 15,900-horsepower compressor station, at a cost of $33 million, near Lake Mills,

Iowa, to serve the growth requirements of 53,000 Dth/day requested for Rochester, Minnesota. On March 15, 2017,

Northern submitted a prior notice filing with FERC seeking approval to construct the new compressor station. Addition-

ally, in 2019 Northern will construct approximately 12 miles of new 16-inch-diameter greenfield pipeline, at a cost of $25

million, to support the Rochester growth requirements.

Northern also will construct two new compressor units totaling 2,840 horsepower, two new measurement stations, and

other minor branch line modifications to serve a new industrial customer that requested firm capacity in the open sea-

son for the 2019 Marquette Branch Line Expansion. Northern will invest $24 million to construct the new facilities to serve

the 25,000 Dth/day incremental capacity in the Market Area.

Separately, in 2019, Northern will install a new measurement station near Hallam, Nebraska, to serve the initial needs of

a new industrial customer that participated in the open season for the Sheldon Branch Line Expansion held in 2016.

Ongoing Growth – 2019 Forward

The momentum is not slowing down. Northern continues to work with new and existing customers to complete cost-

effective expansions of its system. Northern recently held an expansion open season to accommodate anticipated

growth for firm capacity north of Ventura, Iowa, with service starting November 1, 2019. The open season resulted in

more than 120,000 Dth/day of volume. Project authorization will require approval of a FERC Section 7(c) application, a

case-specific application required when expansion capital costs exceed $33 million. Northern is working with custom-

ers to finalize the scope of the project.

Northern also recently completed an expansion open season for the West Leg of its Market Area. The open season

resulted in more than 30,000 Dth/day of expansion requests. Northern is currently working with the bidders to define the

scope of the project, which is expected to be in-service on or after November 1, 2018.

New EG Option for Firm Deferred Delivery Service

Northern is finalizing system application changes and performing system testing for implementation of the

new EG option for FDD service starting June 1, 2018. Under this service option, customers may elect up to 10

Bcf of the currently contracted 65.1 Bcf of FDD annual cycle quantity for the EG option. In an open season

held last year, customers elected 9.261 Bcf of the 10 Bcf of FDD annual cycle quantity as the EG option.

Northern has approximately 739,000 Dth of remaining EG option posted as available for election to begin

with the June 1, 2018, annual storage cycle.

The EG option was developed from a collaborative customer discussion focused on providing firm storage

flexibility targeted for gas-fired electric generation facilities. The option offers enhanced firm daily injection

and withdrawal rights and provides firm daily rights in May. Traditional FDD inventory parameters for mini-

mum and maximum period levels and the annual rollover fee are replaced with mandatory monthly mini-

mum and maximum inventory limits with the EG option.

NORTHERN NOTES | PAGE 5

Have you met…

Northern is pleased to announce the following organizational changes Joe Jessen accepted the position of director, Central region,

effective January 15, 2018, replacing the previous director, An-

gela Brooks. In his new role, Joe is responsible for Northern’s op-

erations in Iowa, Nebraska, Kansas, Wisconsin and Illinois. Joe

began his career in the U.S. Army with a heavy emphasis on

logistics. After an eight-year career in the U.S. Army, Joe was a

small-business owner, owning a residential construction business

for 12 years. Joe began working at Northern in 2009 as a con-

tract construction coordinator and a project manager. In 2013,

he accepted a position with Northern as director, right of way.

Joe has a Bachelor of Science in construction management

from the University of Nebraska-Lincoln.

Joe Jessen, director, Central region

Frank Rozmus has accepted the position of director, gas control and facility plan-

ning, effective March 24, 2018. He will hold overall responsibility for gas control, the

operations communication center, SCADA, and facility planning. Frank has been

with Northern since 2011, working in the facility planning department emphasizing

system modeling and expansion assistance. He has a Bachelor of Science in chem-

ical engineering from the University of Nebraska–Lincoln, and is currently pursuing a

Master of Business Administration at Bellevue University. Frank previously worked for

MidAmerican Energy Company at the Walter Scott Jr. Energy Center. Away from

work, Frank enjoys spending time with his three children, camping in the Pacific

Northwest, and volunteering his time as a professional ambassador to the University

of Nebraska chemical engineering department. Frank replaces Jodie Floyd, who

has accepted the position of operations manager, Spraberry, Texas. Jodie will be

relocating to Midland, Texas.

Frank Rozmus, director, gas control

and facility planning

Field Area Expansion Update

Northern continues its series of expansion projects to increase

the volume of transportation services on the south end of its

Field Area system. These projects will provide approximately

760,000 Dth/day of incremental long-term transportation ca-

pacity in the Permian area of Northern’s system.

The most recent expansion is the Bakersfield expansion project.

This project will provide additional transportation capacity for

associated natural gas produced from Permian’s Midland ba-

sin shale oil play, to a new interconnect with Oasis Pipeline.

The project will provide an incremental capacity of 200,000

Dth/day and is scheduled to be placed in-service in May 2018. The project includes the installation of a new 11,152-

horsepower compressor station, approximately 1.5 miles of 20-inch-diameter pipeline lateral with appurtenances, and a

new interconnect with Oasis Pipeline. Northern is investing approximately $28 million of capital for this expansion.

Bakersfield compressor station

Vonn Milks started as manager, gas control in November 2017. He began his career at

Northern in 2007 in the facility planning department and was the lead facility planner

for the Ventura North expansion project. Vonn graduated with a Bachelor of Science

in chemical engineering from the University of Nebraska-Lincoln and a Master of Busi-

ness Administration from the University of Nebraska at Omaha. Vonn enjoys playing

with his three children and working in his greenhouse, and selling plants and vegeta-

bles at local farmer’s markets.

Vonn Milks, manager, gas control

Northern employees from the Omaha headquarters partici-

pated in the Heat the Streets Run and Walk for Warmth

event held March 3, 2018. Northern was a cosponsor of the

event, which benefits local energy assistance programs ad-

ministered by the American Red Cross, The Salvation Army,

and the United Way of the Midlands. The proceeds from the

event will help these agencies assist seniors, people with

disabilities, and low-income families with their utility bills.

Of the twenty participants from Northern Natural Gas, eight

entered the event’s timed 5-K run. The others completed

the one-mile walking course.

Employees from Northern Natural Gas gather for the annual

Heat the Streets/Walk for Warmth event March 3, 2018

Northern and Employees Help the Disadvantaged with Their Energy Bills

NORTHERN NOTES | PAGE 6 (Have You Met — Continued from Pg. 5)

A Closing Note from Mark Hewett

Commercially, there is no better way to repay the trust of our customers than by providing

the best possible customer service. Judging from the results of the Mastio Survey on cus-

tomer satisfaction, I am proud of the way that our employees have responded to that

challenge. For nine consecutive years, Northern has been ranked either No. 1 or No. 2 in

the survey, an achievement that we truly value.

From a personal standpoint, I am grateful for the relationships between Northern and its

customers. Together, we have formed productive partnerships by taking the time to com-

municate and understand our collective business needs. I want to amplify the voices of

our employees, who have done well in expressing appreciation for your business. To that

end, thank you for your trust in Northern and for the ways we have worked together to

meet the needs of our respective customers. Mark Hewett, president

and CEO, BHE Pipeline

Customer Commitment

Northern’s Vision Statement

To be the preferred provider of natural gas trans-

portation and storage services based on our integ-

rity, operational excellence, financial strength and

environmental responsibility

Northern’s Mission Statement

We are in business to serve our customers.

Fairly. Efficiently. Reliably.

These statements mean that

· We will deliver on time what we promise

· We will share the purpose behind our actions

· We will commit to making it easy to do business

with us

· We will negotiate and perform in good faith

· We will continue to invest in the pipeline in order

to provide you highly reliable service and to

meet your future growth needs

Helping You Manage Your Business

Northern offers many services and has access to a

wide range of supply basins to help you manage

your business easily and efficiently. Many of North-

ern’s systems and procedures have been stream-

lined to make the business Northern does and the

information Northern shares timely and accurate.

For technical inquiries or information

Email: nng.helpdesk@nngco.com

Local to Omaha: 402-398-7664

Out of Area: 866-810-5268

Questions or comments

If you have questions or comments, contact us at

nngcustomerservice@nngco.com

Feedback and Suggestions

To provide feedback about Northern Notes, or

suggestions of newsworthy topics to cover in this

electronic publication, contact Steve Gilbert at

Steve.Gilbert@nngco.com

Northern Natural Gas | 1111 South 103rd Street | Omaha, NE 68124

About Us

Northern Natural Gas is based in Omaha, Nebraska, and operates

the largest interstate natural gas pipeline system in the United

States, extending from the Permian Basin in Texas to the Upper

Midwest. Northern provides transportation and storage services to

approximately 81 utilities and numerous end-use customers in the

Upper Midwest. Northern provides cross-haul and grid transporta-

tion between other interstate and intrastate pipelines in the Permi-

an, Anadarko, Hugoton and Midwest areas. Northern also oper-

ates three underground natural gas storage facilities and two liq-

uefied natural gas peaking units. These storage facilities are fully

contracted and are central to meeting Northern’s customers'

peak-day system requirements.

Northern accesses supply from every major Mid-Continent basin,

as well as the Rocky Mountain and Western Canadian basins. This

supply is ultimately delivered to end-use customers in Minnesota,

Iowa, Nebraska, South Dakota, Wisconsin, Illinois and the Upper

Peninsula of Michigan.

Northern’s Principles

Northern’s principles define and shape the way we do business.

We are committed to an unwavering focus on these principles

that shape our business. At the top of the list is Customer Ser-

vice, followed by five other interrelated principles that are key

to providing the service that customers expect:

Customer Service

We are focused on delivering reliability, dependability, fair pric-

es and exceptional service to our customers.

Employee Commitment

We equip employees with the resources and support they need

to be successful. We encourage teamwork and provide a safe,

rewarding work environment. We make no compromise when it

comes to safety.

Environmental Respect

Natural resources are essential for the production of energy.

We are committed to using these resources wisely and protect-

ing our environment for the benefit of future generations. Our

Environmental RESPECT Policy details this commitment in the

areas of Responsibility, Efficiency, Stewardship, Performance,

Evaluation, Communication and Training.

Regulatory Integrity

We adhere to a policy of strict regulatory compliance and pur-

sue frequent, open communication with regulators regarding

our business performance.

Operational Excellence

Together with our employees, we pride ourselves on excellence

in every aspect of our work. Our high standards for operations

and system maintenance enable us to meet and exceed our

customers' expectations, perform our work safely, and preserve

our assets.

Financial Strength

We are excellent stewards of our substantial financial resources.

Backed by Berkshire Hathaway, we invest in hard assets and

focus on long-term opportunities that will contribute to the fu-

ture strength of the company.

“We are in business to serve our customers. Fairly. Efficiently. Reliably.”

NORTHERN NOTES | PAGE 7