Connecting Energy to our Future

Connecting Energy to our Future NV Energy 2011 Corporate Responsibility and Sustainability Report 1

TABLE OF CONTENTS About our Company (Vision/Mission/Values) 3 Corporate Messages A Letter from our President and CEO 4 A Letter from our Executive, Environmental Services and Safety 5 Achieve Operational Excellence 6 Deliver Sustainable Energy 15 Build Strong Customer Relationships 23 Inspire Excellence from All Employees 31 Foster Enduring Partnerships 35 GRI Index 39 Report Parameters 44 Assure Investment Diligence - https://materials.proxyvote.com/approved/67073y/20110308/10k_83135/html2/default.htm 2

NV ENERGY VISION To be the premier provider of energy for Nevada. NV ENERGY MISSION To provide energy, products and services that enable our customers to manage their energy needs while delivering industry-leading returns to our investors. OUR VALUES Safety Reliability Compliance Reasonable Cost Customer Focus Teamwork/Diversity Integrity Continuous Improvement 3

LETTER FROM OUR PRESIDENT AND CEO Our vision is simple become the premier provider of energy for Nevada. Achieving this vision requires a commitment to creating long-term sustainable value by doing business in a way that benefits our customers, employees and stockholders as much as it does our communities. And the key to sustainable performance is an understanding of how energy is connected to our future. The difficult economic environment seems to be the one constant these days, but in spite of that, I m pleased to report that NV Energy continued to invest in long-term sustainable value in every aspect of our business, guided by our six strategic initiatives: Achieve Operational Excellence Deliver Sustainable Energy Build Strong Customer Relationships Inspire Excellence from All Employees Foster Enduring Partnerships Assure Investment Diligence NV Energy is at the forefront of an evolution that is redefining the utility business. NV Energize, our smart home initiative, allowed us to be among the first utilities to provide our customers with the tools to better manage their energy use. Looking forward, NV Energize is at the heart of our effort to transform our relationship with customers through more efficient use of energy. As you will see throughout this report, we had a number of significant accomplishments in 2011: Our energy efficiency programs reduced statewide energy consumption by an estimated 300 million kilowatt hours, which is enough energy to serve nearly 27,000 homes for an entire year. We completed the 484-megawatt, highly-efficient combined-cycle addition to our Harry Allen Generating Station. With the completion of this facility, we have more than doubled our owned generation since 2003 to 6,000 megawatts, which significantly reduces our reliance on purchased power. We exceeded the Nevada Portfolio Standard requirement of 15 percent of sales for 2011, achieving a statewide total of 18.9 percent. And we far exceeded the minimum requirement that at least five percent of the credits be derived from solar energy sources. Our success has been achieved by thousands of dedicated and highly skilled employees. Every day, they embrace our corporate culture. And driving that culture are a list of core values that reflect commitment to safety, compliance, reliability, diversity and reasonable cost, all in the name of delivering sustainable value to all constituents. NV Energy continues to carry on the tradition of improving the communities in which we live and work. Last year, our company and its Foundation contributed $5.3 million to charitable organizations, including multi-year commitments to several groups that support health, education, arts and culture, and the environment. Our employees personally demonstrate their commitment to the community, volunteering more than 30,000 hours to a variety of important causes throughout the state. I m proud of the work we do. Connecting energy to our future has as much to do with creating opportunities for our customers, investors and communities, as it does with creating long-term sustainable value. We are committed to this and we are passionate about its importance to our success we hope you will see this throughout this report and in our work. Michael W. Yackira President and Chief Executive Officer 4

LETTER FROM OUR EXECUTIVE, ENVIRONMENTAL SERVICES AND SAFETY I am pleased to present our Corporate Responsibility and Sustainability Report, highlighting the continuing progress we have made on our commitments to incorporate sustainable practices into the heart of our business. Our Company has a profound heritage in Nevada, dating back to the beginning of the twentieth century, when Nevada s population was small and widely dispersed. Growing a utility that extends across nearly 46,000 miles of service territory, much of it in a sensitive environment, has not been easy. However, throughout our history, we have faced serious challenges and managed to flourish despite the odds. Our commitment to sustainability is one of the driving forces behind the endurance of our Company. Our corporate strategy embraces operational excellence, financial strength, customer focus and disciplined investment, and provides the foundation on which our success is built. This strategy forms a basis for continuous improvement and business success. Each day, NV Energy operations touch the lives of our more than one million customers and Nevada s 40 million visitors through the energy we generate, the manner in which we conduct our business and the value that we create for our stakeholders. In 2011, we continued to strengthen our position as a sustainability leader: We further reduced our total greenhouse gas emissions per customer when compared to our baseline year of 2000. Our southern utility was ranked first in reliability among investor owned utilities by the Edison Electric Institute and our northern utility was in the top ten. We increased the amount of construction waste recycled by 25 percent. From the hardware and equipment that supports the generation of power to the use of software that helps customers maximize energy efficiency, we are taking a closer look at environmental impacts across our entire supply chain. These innovations better position us to help our customers integrate sustainability into their own lives, thereby multiplying the impact of our actions. Our sustainability progress in 2011 would not be possible without our employees. NV Energy has continued to strengthen its focus on employee development to ensure a viable future workforce through initiatives such as Generation Workforce 2020 and our Diversity-Centered Leadership training. We have long known that our ultimate success depends on the makeup and prosperity of the environment in which we operate. Whether it is investing in strong communities, shaping a discussion on environmental policy, implementing new technology, or rolling out new energy efficiency programs, sustainability is good business for NV Energy, our customers, our employees, our shareholders and, most importantly, the environment. We want to hear from you and welcome your comments and suggestions to sustainability@nvenergy.com or via social media at facebook.com/nvenergy and twitter.com/nvenergy. Sincerely, Starla Lacy Executive, Environmental Services and Safety 5

ACHIEVE OPERATIONAL EXCELLENCE NV Energy is committed to providing service that meets or exceeds the expectations of all of our stakeholders. To accomplish this we continue to build and promote a strong culture that advances the values of safety, compliance and environmental stewardship. Key Performance Indicators 2011 Goals Performance 2012 Goals No Notices of Violation Issued Reduce opacity by 80% over 2010 levels Reduce deviations by 40% over 2010 levels No Notices of Violation were issued in 2011 Reduced opacity by over 60% of 2010 levels Reduced deviations by over 40% of 2010 levels No Notices of Violation Reduce opacity by 25% over 2011 levels Reduce deviations by 25% over 2011 levels No Reportable Releases 7 reportable releases No Reportable Releases Increase recycling percentage by 10% company-wide Increase beneficial use of coal combustion products Continue water balance surveys Achieve top-decile safety performance by 2020 through year over year decrease of work related injuries and illness Achieve top-decile nationwide in operating performance by 2020 through year over year improvement of the outage rate NV Energy increased construction material recycling 25% from 2010 totals Beneficial use was increased by 6% over 2010 totals Baseline water usage survey was completed in 2011 Safety Incident metric continues to improve along with a 30% reduction in preventable vehicle accidents NV Energy South ranked #1 in Edison Electric International survey of investor owned utilities for SAIDI and SAIFI NV Energy North rank 9th and 6th respectively Decrease landfilling of wood poles by 2015 create a baseline for wood pole recycling Increase beneficial use of coal combustion products Track water consumption against industry trends Achieve top-decile safety performance by 2020 through year over year decrease of work related injuries and illness Continue to improve reliability through continued improvement of the SAIDI and SAIFI metrics in NV Energy North and maintain top performance in NV Energy South 6

ENVIRONMENTAL MANAGEMENT Clean Air Act Regulatory Changes Mercury and Air Toxics Standards (MATS) In December 2011, the U.S. Environmental Protection Agency (EPA) signed for publication in the Federal Register a final rule regulating hazardous air pollutant (HAP) emissions from coaland oil-fired utility steam generating units. The MATS rule requires the maximum achievable control technology to be installed on eligible generating units, but does not specifically list which control technology to use. The rule gives three years to comply; however, the EPA rule contains a provision to grant a one year extension if a source cannot comply in the threeyear window. Currently, all four units at Reid Gardner and North Valmy Unit 2 comply with the MATS rule. We do expect that a retrofit aimed at acid gas reduction will be required to achieve compliance for North Valmy Unit 1. SO2 LBS/MWH 5 4 3 2 1 0 2005 2009 2010 2011 NV Energy Avg. 2.01.63.67.51 National Avg. 5.10 3.30 2.62 -- NOx LBS/MWH PM10.3 LBS/MWH.2 Regional Haze Rule In June 2005, the EPA finalized amendments to the July.1 0 1999 Regional Haze Rule, requiring states to develop State Implementation Plans (SIP) to demonstrate compliance. The rule requires industrial facilities emitting NV Energy Avg. 2005.20 2009.05 2010.05 2011.05 air pollutants that reduce visibility, by causing TOTAL FOR ALL PLANTS S02 NOX PM10 MWH TONS PRODUCED or contributing to regional haze, to install Best Available Retrofit Technology (BART). Nevada released its BART requirements and proposed SIP in 2009. On June 9, 2011, the EPA published its draft proposal to approve Nevada s Regional 2005 2009 2010 2011 11,726 7,649 7,587 5,012 24,566 11,976 10,261 7,111 1,155 659 604 528 11,672,985 24,111,271 22,558,114 19,774,701 Haze Plan as meeting the requirements of the Clean Air Act. However, in announcing its final approval in December 2011, the EPA opted to take no action on the BART determination for nitrogen oxides (NOx) at Reid Gardner. The approval did include BART determination on SO2 and Particulate Matter for Reid Gardner, as well as BART controls proposed for our other affected units. At the conclusion of the public comment period in the Summer of 2012, we expect the EPA to approve a BART determination for NOx at Reid Gardner. 5 4 3 2 1 0 2005 2009 2010 2011 NV Energy Avg. 4.21.99.91.72 National Avg. 1.95 1.34 1.21 -- Coal Ash Management Coal ash is a byproduct of coal combustion. The EPA is considering new regulations for coal combustion products and beneficial reuse. Currently, the EPA encourages the reuse of coal ash, also known as beneficial reuse, and our plants seek to recycle coal ash whenever possible. About 15-20 percent of the ash our plants produce is beneficially reused. The challenging economic environment has limited our goal to increase our reuse, as the local demand has been low due to the decrease in construction activities. We 7

believe that it is possible that the EPA will continue to allow some beneficial reuse without classifying it as a hazardous waste. FLY ASH 2005 2009 2010 2011 Ash that is not reused is disposed of in regulated landfills located on site. The landfills are designed to local geologic and hydrologic conditions and are operated to comply with federal, state and local regulatory requirements. In keeping with the company s continuing efforts to minimize water usage Tons Recycled Total Tons of Fly Ash Percent Recycled 15,614 302,512 5% 44,582 242,891 18% 36,860 213,660 17% 38,528 168,607 23% at our power plants, the ash is handled in a dry state and disposed of at the landfill. Toxic Release Inventory Each year we submit a Toxic Release Inventory (TRI) report, which provides a list of chemicals used or produced by our facilities when generating electricity. The EPA provides the TRI to the public via an interactive website. Most of our releases come from the trace elements found in coal ash that we landfill on site. The amount of ash landfilled is dependent on the operating frequency of our coal units and the amount of fly ash that we are able to send off for beneficial reuse. The 2010 decrease to the Other Surface Impoundments metric is due to the way we currently sample surface impoundments. Due to changes in sampling locations in the Reid Gardner Discharge permit, a more accurate assessment of surface impoundment discharge has resulted in a decrease from TRI CORPORATE VALUES Releases to Land Releases to Air Other Surface (Ponds) 2005 1,161,262 230,446 1,461 2008 1,276,407 215,040 8,207 2009 1,612,103 243,589 9,419 2010** 1,507,810 228,645 108 % CHANGE FROM 2009 3.3% 3.2% 97.7% 2010 forward. The 2011 TRI will be filed in *2011 releases will not be submitted until July 1, 2012 July 2012. **Revised 2010 values submitted in 2012 Waste Management and Recycling After completing a commingled recycling pilot program in 2010, NV Energy expanded the program to our seven southern generation facilities. By having commingled recycling at our generation facilities, our southern fleet is able to reduce waste to the landfill with very little effort and at less cost than traditional TOTAL TONS OF MATERIAL RECYCLED 6000 5000 4000 3000 2000 1000 0 2007 2008 2009 2010 2011 waste hauling. NV Energy was able to recycle approximately 25 percent more construction waste than it has in the past. We continuously work with our vendor to improve the recycling program and expect a higher diversion of construction material from the TOTAL TONS OF WASTE GENERATED WASTE REDUCTION RECYCLED 36% LANDFILL 64% waste stream in 2012. NV Energy was able to source this recycling opportunity to a diverse vendor, which supports a small business in our local community. 8

Solar Compactor - A First in Las Vegas Up to 90 percent of the trash collected from the average office building can be recycled. Our new recycling solar compactor, the first in Las Vegas, is helping NV Energy make the most of that statistic. The compactor, located at our Beltway building, has increased recycling efforts by 25 percent since it was installed in August. This solar-powered compactor holds up to four times as much waste for recycling as a traditional compactor. The compactor is powered by solar panels and the energy created is stored in NV Energy was the first company in Las Vegas to install a solar recycling compactor. four premium deep-cycle batteries. If the compactor depletes the solar-powered batteries, it can pull energy from the electrical outlet, ensuring that the unit can always function properly. Water Use NV Energy s facilities operate in an arid, desert environment and we take great care to be good stewards of our water resources. Many of our generating stations use recycled effluent, dry cooling, or both. In 2011, we finalized a water usage baseline in order to set future water conservation goals. WATER USAGE MILLION M3/MWH (GROSS) 1.40 1.20 1.00 0.80.60.40.20.00 2008 2009 2010 2011 WATER CONSUMPTION 2008 2009 2010 2011 GENERATION FLEET Fresh Water Usage 25.24 19.93 17.00 17.11 Grey Water Usage 2.62 1.34 0.61 0.61 Total Water Withdrawn 27.86 21.27 17.61 17.72 Harry Allen Combined-Cycle In 2011, NV Energy completed construction of a 484-megawatt combined-cycle addition at our Harry Allen Generating Station. The new unit uses air-cooled condensers to cool steam much like the radiator found in a car. The Harry Allen cooling system has 36 cells that are 36 feet in diameter each. The system uses only 6 percent of the water used by conventional watercooled facilities. And, for the water used, the facility uses a waste water treatment system that recaptures and recycles about 75 percent. Not only do air-cooled condensers reduce the water consumption at our facilities but they also avoid releasing atmospheric particulate matter that a wet tower would emit. With the addition of the Harry Allen Combined-Cycle addition, we can meet nearly 80 percent of the peak energy needs of southern Nevada with companyowned generation. 9

BIODIVERSITY Avian Protection NV Energy is committed to reducing impact on endangered and migratory birds, along with other wildlife and plant species. Our customized avian protection plan is designed to support the health of these species, ensure biodiversity to the ecosystem is maintained, reduce the risk of fires and collateral environmental damage, and ensure continued delivery of reliable power to our customers. The goals of the NV Energy Avian Protection Program (APP) are to: Document bird mortalities, vulnerable poles and lines, and problem nests Provide information, resources and training to improve employee knowledge and awareness of the APP Construct all-new and rebuild older facilities in areas of raptor use to avian-safe standards Retrofit or modify power poles where a protected bird has died Participate with public and private organizations in programs and research to reduce detrimental effects of bird interactions with power lines and equipment Ensure that actions comply with applicable regulations Since the implementation of our APP and subsequent field training, we have received reports from every corner of our service territory that allow us to monitor and track any bird incidents. In 2011, we reported 34 avian mortalities, up from 28 mortalities reported in 2010. NV Energy is investigating the source of the increased mortalities and working to develop a plan to prevent future electrocutions along our transmission line. Also, we retrofitted 344 structures in 2011. NV Energy is looking forward to expanding our avian protection efforts in 2012 by targeting more high risk locations for retrofits. We understand that continued training and reporting will enable us to better protect birds in our service territory. We report bird mortalities to the U.S. Fish and Wildlife Service in compliance with applicable laws, regulations and permits. AVIAN MORTALITIES NUMBER OF MORTALITIES 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 TOTAL 17 33 26 28 34 RAPTORS 17 27 17 21 21 STRUCTURE RETROFITS NUMBER OF STRUCTURES 400 350 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 AVIAN RETROFITS 30 268 230 360 344 10

Spared Sparrows NV Energy has multiple precautions in place to protect animals, birds, plants and the environment at all of its construction sites. The environmental constraints associated with the 235-mile-long One Nevada Transmission Line (ON Line) is a good example. Not only was every foot along the line walked more than once by trained environmental specialists, but each of the nearly 400 construction crew members who will work on the project receive special training to Crews building the Robinson Summit Substation site worked help protect the environment and know the do s and around a sparrow s nest. don ts of working in sensitive public lands. To help the company, environmental subcontractors are in the field to help monitor the construction activity and assure compliance with Bureau of Land Management approved mitigation measures. This training has been put to good use. Crews preparing the new Robinson Summit Substation site worked around a single sparrow s nest that was found in a patch of sage brush. The nest contained four eggs, and was left intact until the young birds hatched and were on their own, which took approximately five weeks. Genoa Trail System In November 2011, a group of NV Energy volunteers toiled with shovels and pickaxes to open a trail head for a portion of the Genoa Trail System in northern Nevada. The terrain was steep and inaccessible to motorized equipment. The trailhead is part of 16 miles of non-motorized trails in the Genoa area open to hikers, equestrians, mountain bikers and dogs. The Genoa Trail System also connects with the Tahoe Rim Trail providing recreational access throughout the Eastern Sierra Nevada Range. The Genoa Trail System opened to the public in May 2012. NV Energy volunteers work hard to open a trail head on the Genoa Trail System in northern Nevada. Fascinating Fossil Find Thanks to the sharp eye of an environmental monitor working on the ON Line project team, geological historians will soon have a different perspective about Nevada and its pre-historic conditions. Evidence of a 300 million year-old lepidodendron plant was found near the ON Line construction activities in White Pine County. This fossil is considered a significant discovery, because the tree was not known to occur in Nevada. The fossil clearly shows the diamond-shaped pattern of the lepidodendron bark. Each diamond represents the point of attachment of a fallen leaf from this coal-age plant, which grew to more than 100 feet tall. 11

The fossil is being analyzed and it will be turned over to the Bureau of Land Management, which likely will have it curated at the Nevada State Museum in Carson City. Health and Safety NV Energy is committed to providing energy services in a manner that ensures the safety of our employees, contractors, customers and the communities we serve. We believe that no job is so important and no service so urgent that we cannot take time to perform This evidence of a 300 to 360-million year-old lepidodendron all work safely. Each individual is responsible and tree bark was found near the ON Line project in White Pine County. accountable for his or her own safety conduct and the safety of others. To that end, all individuals must feel empowered to intervene if unsafe behaviors are observed. OSHA INCIDENCE 5 NV Energy has a comprehensive safety program and RATE AND THE 4 employees are expected to comply with federal, state, NATIONAL 3 AVERAGE local, and company regulations, laws, and policies and 2 procedures. Safety performance indicators are part of 1 our company s scorecard and are utilized in its shortterm incentive program. Two metrics that ensure our NV Energy s Incidence Rate 0 National Avg. 2005 2009 2010 2011 leaders are demonstrating a commitment to safety are safety meetings and safety audit/observations. During 2011, leadership led 3,600 safety meetings and performed 1,900 safety audits and observations. 2011 Safety Initiative and Improvements NV Energy was able to decrease our incident rate by 3 percent and vehicle accident rate by 30 percent. This improvement can be attributed, in part, to the following initiatives: A Safety Perception Survey was performed in 2011. The outcome indicated our safety culture is strong but also indicated specific opportunities for improvement. Two survey areas that received the most favorable scores were Incident Analysis and Safety Tailboards. A steering committee was formed to address the items with the least favorable scores. Health & Safety developed a Safety Action Plan with 25 measurable activities. Ninety-five percent of the items were either completed or, due to the nature of the activity, started and are ongoing. For example, a multi-disciplinary group of employees was formed to benchmark and revise a key safety program. Year two of the Generation Biennial Environmental, Health and Safety Plant Audit program resulted in the successful completion of comprehensive OSHA-style audits at Clark, Fort Churchill, Reid Gardner, Harry Allen and Chuck Lenzie Generating Stations. 12

The Generation Fleet was equipped with By the end of 2011, more than half of our generating stations achieved more than 100,000 hours without a lost time accident. Audiometric Testing, Respiratory Fit Testing and Heat Stress monitoring equipment to further enhance our industrial hygiene monitoring program. Having on-site equipment provides flexibility in scheduling the various required employee tests, helps us maintain compliance and reinforces the importance of our Personal Protective Equipment procedures. The program is designed to reduce, if not eliminate, employee exposures to physical hazards, including hearing shifts. Energy Delivery leadership supported and scheduled time for NV Energy Linemen and Gas Operations employees to attend the IBEW Local 1245 Hold the Pull and Control the Pressure programs. The peer-to-peer safety programs were intended to heighten safety awareness using actual incidents and bring about an improved safety culture. 100 percent of the Emergency Action and Response Plans were revised in Generation. The standard format ensures employees who transfer or support other plants during major turnarounds know how and where to find information quickly and efficiently. Community Safety NV Energy continues to provide safety information and outreach to our community. We work with residents, contractors and students to educate them about the hazards of working around utility equipment and how to recognize gas leaks. Safety messages are delivered through customer bills, advertising campaigns and online. NV Energy created an interactive website and curriculum to bring electrical and natural gas safety to children. More information on our community programs can be found at nvenergy.com/kidssafety. The community can request a safety subject matter expert to speak at group functions via our website. NV Energy provides on-going training support for fire departments in its service territory upon request. This includes working with local police and fire departments to keep them apprised of topical electrical safety concerns, such as how to recognize electrical theft that might cause harm to emergency responders. In southern Nevada, electrical safety programs for first responders are provided each year Crews conduct a safety demonstration for local elementary to all four area fire services rookie training academies school students. and to the State Forestry Division, BLM field workers, area contractors and Public Works agencies in each political subdivision. We also provide electrical safety training support to mining companies and their first response teams. Emergency Management Stakeholder Training classes are routinely conducted for the Sierra Fire Protection District, and the Reno, Sparks and 13

Storey County Fire Departments to improve natural gas safety awareness and further efforts of mutual cooperation during gas emergencies. In 2011, we spearheaded the 15th consecutive year of NV Energy s Natural Gas Safety Training (NGST) Awareness Program for contractors, excavators and developers. Five hundred and thirty five contractor employees from 52 companies, union organizations and government agencies attended one of nine classes conducted during the year. The program helps those performing and inspecting excavation activities to learn safety requirements associated with our underground gas and electric distribution system, while at the same time enabling NV Energy to sponsor supplemental activities recommended by the U.S. Department of Transportation s Office of Pipeline Safety Public Awareness. SYSTEM RELIABILITY Employees take part in bucket truck self-rescue training. System Average Interruption Duration Index NV Energy utilizes a variety of utility-standard performance metrics to measure reliability service levels. One of the most common metrics is the System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI). SAIDI measures the average number of minutes an average customer was without power during a year. SAIFI measures the number of sustained outages the average customer has experienced over a specific period of time. Interruptions greater than five minutes are included in the SAIFI calculation. NV Energy South was ranked first in the Edison Electric Institute s International survey of investor owned utilities for SAIDI and SAIFI. NV Energy North ranked 9th and 6th, respectively. NV Energy takes great pride in providing industry-leading reliability service levels. Smart infrastructure design and favorable weather conditions are but a few of the reasons why NV Energy is a top performer. We have implemented many projects that increase efficiency and improve system operations, actively manage maintenance programs that target critical infrastructure, and administer an effective vegetation management program. 14

DELIVER SUSTAINABLE ENERGY Lead in the application of sustainable energy technologies while providing competitive prices for our customers. Key Performance Indicators 2011 Goals Performance 2012 Goals Develop a new long term Climate Change metric to be implemented by calendar year 2012 NV Energy s utilities supply at least 25% of their retail energy sales from renewable energy resources by 2025 Minimum of 5% of the RPS to come from solar resources A goal was developed Referring back to a prior goal, emissions per customer were reduced by 25% over year 2000 levels Renewable energy is on track to meet this goal At the end of 2011, NV Energy exceeded its 2011 target by 1.7% Solar energy is on track to meet this goal At the end of 2011, NV Energy exceeded its 2011 target by 5% NV Energy is evaluating a new metric based on lbs/mwh average CO2 emissions for its entire fleet by the year 2025. At the present time, uncertainty over the price of natural gas as well as renewable development costs are significant drivers as to what will be achievable, and therefore the new goal has not yet been finalized NV Energy s utilities supply at least 25% of their retail energy sales from renewable energy resources by 2025 Minimum of 5% of the RPS will come from solar resources 15

CLIMATE CHANGE Green House Gas Legislation and Regulations The topic of climate change continues to evolve, and response to this issue brings with it significant environmental, economic and social implications for NV Energy. Potential impacts from proposed legislation could vary, depending upon proposed carbon dioxide (CO2) emission limits, the timing of implementation of those limits, the program design, the degree to which offsets are allowed and available, and provisions for cost containment measures, such as a safety valve that provides a ceiling price for emission allowance purchases. Our contribution of greenhouse gases (GHG) from our current generation fleet is partly mitigated due to our fuel portfolio being predominately natural gas, which emits approximately 50 percent less CO2 than coal. Since these initiatives continue to evolve, NVE has and will continue to identify projects that minimize or offset GHG emissions and believes that precautionary actions to limit GHG emissions are appropriate and make good business sense. The EPA finalized regulations in September 2009 that require certain categories of businesses, including fossil fuel-fired power plants, to monitor and report their emissions beginning in 2011. We have been reporting our annual GHG emissions since we joined the California Climate Action Registry (CCAR) in 2006. NV Energy also reported 2010 GHG emissions to the EPA before the reporting deadline of September 30, 2011. As required by the EPA, we will continue to report annual GHG emissions to comply with the federal mandatory GHG reporting program. After a series of developments and rule proposals, in March of 2010, the EPA affirmed its position that the Clean Air Act (CAA) permitting requirements under the Prevention of Significant Deterioration (PSD) and Title V permit programs are not triggered for a pollutant until a regulatory requirement to control emissions of that pollutant becomes effective. As a result of this EPA determination, new or modified plants that were subject to PSD or Title V programs had to address GHG emissions in new permit applications as of January 2011. Similarly, GHG emitted above certain thresholds from existing plants were also covered under the Title V program beginning in January 2011. Currently, all NV Energy generation facilities have operating permits that could require alteration to comply with the rule if modifications are undertaken. The extent to which this rule could have a material impact on our generating facilities depends upon whether physical changes or change in operations subject to the rule would occur at our generating facilities; future EPA determinations on what constitutes best available control technology for GHG emissions from power plants; and whether federal legislation is passed which overrides the rule. During 2011, none of NV Energy s generation facilities triggered the criteria specified in this rule. On December 23, 2010 in a judicial settlement, the EPA announced that it will propose first-time GHG emission standards and guidelines for the power plant sector under the federal CAA. Specifically, the agency expects to propose new source performance standards (NSPS) and emissions guidelines for existing sources for the power plant sector as soon as 2012. It is reasonable to expect that the limits on GHG emissions imposed by the new source performance standards and guidelines for existing sources will have an impact on generating facility operations. However, until the standards and guidelines are proposed, it is impossible to predict the potential effect on our generating fleet operations. 16

Also in 2010, the EPA continued to finalize subparts of the Greenhouse Gas Reporting Rule. The mandatory reporting rule requires NV Energy to report on stationary combustion sources (Subpart C and Subpart D), Sulfur hexafluoride (Subpart DD), and as a supplier of Natural Gas (Subpart NN). NV Energy successfully reported its Subpart C, D, and NN emissions in 2011. Since the total CO2 number reported to the EPA is a subset of our total direct CO2 emissions reported NV Energy executives meet Lisa Jackson, EPA Administrator to The Climate Registry, we did not report the EPA during a Whitehouse Business Council roundtable event. greenhouse gas emissions in this report. However, the EPA has posted our emissions entry on their website for the public to access. Our Position As Nevada struggles through these slow economic times, NV Energy must continue to meet the state s energy needs while balancing the economic and regulatory challenges of pending Climate Change legislation. We continue to support the following principles to guide our efforts: Greenhouse gas emissions should be regulated at the federal level. Significant investment in new generation technology is essential to reduce carbon. A GHG regulatory program must accommodate demographic shifts and electricity load, so as to not disadvantage high-growth regions such as the West. The western landscape presents distinct challenges to addressing GHG emissions from electricity generation. Looking beyond our basic principles for Federal legislation; NV Energy has committed to the following initiatives by 2020 as a proactive approach to reducing our corporate climate footprint: Continue to be a leader in clean, renewable energy through ownership, development, education and advocacy. Electrically interconnect the utilities to ensure an integrated Energy Supply/Delivery system Evaluate and optimize the utilization of existing and planned generation resources. Promote life-cycle analysis as a sustainability component to our corporate decision making processes. Encourage lead-by-example conservation and environmental education programs for our employees that can be transitioned into our local communities. 17

Our Climate Change Disclosures NV Energy discloses information about our emissions and the potential risks to the public through several registries and reports. While some reporting of our emissions is mandatory, NV Energy also reports voluntarily through several outlets. Below is a summary of the different outlets to which we disclose. The Climate Registry Voluntary NV Energy has been a founding member of The Climate Registry since 2007. The Climate Registry is a nonprofit organization that provides meaningful information to reduce greenhouse gas emissions. The Climate Registry establishes consistent, transparent standards throughout North America for businesses and governments to calculate, verify and publicly report their carbon footprints in a single, unified registry. In 2009, the California Climate Action Registry (CCAR) merged with The Climate Registry (CR). We no longer report to CCAR. The 2011 inventory is submitted in June of 2012 and will be verified before December 2012. California AB32 - Mandatory NV Energy is subject to this rule both as a marketer and multijurisdictional retail provider. In 2011, the sale of our California service Global Warming Solutions Act territory was completed. Therefore, we will not be required to report to CARB as a multijurisdictional retail provider going forward. We will continue to report as a marketer of power to California. EPA Mandatory Reporting Program Mandatory NV Energy began reporting this data in 2011 through the EPA reporting tool. The 2010 emissions were reported in September 2011. In 2012, we will be required to additionally report SF6 emissions, which will be reported in Fall of 2012. NV Energy 10-K Mandatory NV Energy s annual 10-K contains reporting on climate change and the potential risks the company may face. NV Energy Voluntary NV Energy has issued this report since 2009. It contains year over year Corporate comparisons of our CO2 emissions. Historically we have reported our Responsibility and Sustainability CO2 as verified from the CCAR registry. With CCAR s merger with The Report Climate Registry, the 2009 and future emissions will be as verified from The Climate Registry. For this 2011 report, the total CO2 emissions and CO2 lbs/mwh have been recalculated to conform to The Climate Registry s Electric Power Sector Protocol. DIRECT CO2 EMISSIONS TONS/YEAR 13,000,000 12,500,000 12,000,000 CO2 INTENSITY LBS/MWH 1,400 1,200 1,000 800 11,500,000 600 11,000,000 10,500,000 400 200 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 18

Renewable Energy Sustainable energy has been a steadfast commitment by NV Energy for more than a quarter of a century. That longstanding commitment and momentum paid great renewable dividends in 2011, as many new renewable projects began to produce clean energy for customers. Just three years ago, NV Energy s committed renewable energy projects topped out at about 400 megawatts of energy. That number grew by 120 megawatts in 2011 and will see an additional 300 megawatts of clean energy sources added by the end of 2012. By year-end, we expect that our customers will benefit from more than 800 megawatts of renewable resources that are currently being constructed across Nevada, or twice as much as just a few years ago. On the distributed generation renewable front, the company s RenewableGenerations customer incentive program, which provides rebates to residential, small business, schools and other agencies nearly tripled its previous accomplishments in 2011 alone These successes were all achieved in alignment with efforts to carefully balance customer energy needs, to meet legislated requirements, and to ensure that energy sources represented the best value for customers. Much of the success that has been experienced in the last three years can be attributed Senior VP Tony Sanchez presents a SolarGenerations rebate check to Three Square Food Bank. to the ability of the Renewable Energy team to execute on projects that are able to take advantage of federal grants and loan guarantees over a very limited window of opportunity. These additional financial benefits helped increase the success rate of NV Energy s renewable projects from a historic 60 percent rate to the current 90 percent rate. Both operating companies, Nevada Power and Sierra Pacific Power, exceeded the Nevada Renewable Portfolio Standard (RPS) requirement of 15 percent of sales for 2011. Nevada Power achieved an RPS of 16.7 percent, and Sierra Pacific Power came in at 24.9 percent for 2011. Both companies also exceeded the minimum requirement that at least 5 percent of the RPS credits be derived from solar energy sources. Construction crews work on First Solar s 50-megawatt Silver State Solar North project near Primm, NV. 19

The RPS outlook remains positive, although we will be required to balance a number of variables including load growth, changes in law, continued successful operation of the existing renewable energy portfolio, and stable resource availability for projects. In addition to these factors, the RPS will steadily increase from 15 percent of retail sales in 2012 to 18 percent in 2013, to 20 percent in 2020, and finally to 25 percent in 2025. Some of the notable project milestones that were accomplished on behalf of NV Energy customers during 2011 include the substantial completion or commercial operation of the: 22.5-megawatt Jersey Valley Geothermal Project in Lander County 12-megawatt CC Landfill Energy project north of Las Vegas that converts landfill gas to energy 32- megawatt Tuscarora geothermal energy project in Elko County, Nevada 52-megawatt Silver State Solar photovoltaic energy project near Primm, Nevada 3.2-megawatt Lockwood Landfill Energy project located east of Reno The company entered into several new agreements for additional renewable energy resources for its customers. During 2011, the company received regulatory approval to secure more than 100 megawatts of additional renewable resources. Those projects include: A 25-year power purchase agreement for a 30-megawatt solar photovoltaic facility in North Las Vegas A similar agreement for a 20-megawatt solar photovoltaic facility north of its conventional gas-fueled generating units north of Las Vegas A 20-year power purchase agreement for a 51-megawatt geothermal generating facility in Churchill County, Nevada Renewable credit purchase agreements with two small concentrated solar photovoltaic projects in North Las Vegas that total approximately 1.5 megawatts that will consume their energy on site Overall, NV Energy customers are now benefiting or will soon be benefiting from 22 geothermal energy projects, 13 solar facilities, four biomass or methane energy projects, five small hydro resources, one waste heat recovery project and Nevada s first large-scale wind farm. The total nameplate ratings of those projects equals more than 1,000 megawatts of diverse clean generation resources that will help provide sustainable energy to NV Energy customers for many years to come. 20

NV ENERGY S DIVERSE RENEWABLE ENERGY SOURCES GEOTHERMAL 1 Beowawe Power 17.7 MW 2 Brady Geothermal Project 24.0 MW 3 Clayton Valley 1 53.5 MW 4 Desert Peak Geothermal Project #2 25.0 MW 5 Dixie Meadows 51.0 MW 6 Faulkner 1 49.5 MW 7 Galena 2 13.0 MW 8 Galena 3 26.5 MW 9 Homestretch 2.1 MW 10 Jersey Valley Geothermal Project 22.5 MW 11 McGinness Hills 52.0 MW 12 Richard Burdette Generation Facility 26.0 MW 13 Salt Wells 23.6 MW 14 San Emidio 11.8 MW 15 Soda Lake I 3.6 MW 16 Soda Lake II 19.5 MW 37 17 Steamboat Hills 14.6 MW 18 Steamboat IA 2.0 MW 19 Steamboat II 13.4 MW 20 Steamboat III 13.4 MW 21 Stillwater 2 47.2 MW (Photovoltaic Addition 22.0 MW) 22 Tuscarora (aka Hot Sulfur Springs 2) 32.0 MW 14 39 42 38 36 12 8 41 43 17 18 9 19 20 2 4 7 21 15 16 13 5 6 3 10 25 11 1 22 40 45 ON Line 500 KV Transmission Intertie (Under Construction) SOLAR 23 Amonix Pecos Solar 0.5 MW 24 CNLV - Solar 1.0 MW 25 Crescent Dunes 110.0 MW 26 FRV Spectrum 30.0 MW 27 Las Vegas Valley Water District (Six Projects) 3.0 MW 28 Mountain View Solar 20.0 MW 29 Nellis AFB Solar Star 13.2 MW 30 Nevada Solar One 69.0 MW 31 Procaps Laboratory 0.2 MW 32 RV Apex Solar 20.0 MW 33 Searchlight Solar LLC 17.5 MW 34 Silver State Solar 52.0 MW OTHER BIOMASS 35 CC Landfill Energy LLC 12.0 MW 36 Lockwood Renewable Energy 3.2 MW 37 Sierra Pacific Industries 10.0 MW 38 Truckee Meadows Water Reclamation Facility.8 MW HYDRO 39 Fleish 2.3 MW 40 Hooper 0.8 MW 41 Truckee Carson Irrigation District 4.0 MW 42 Verdi 2.2 MW 43 Washoe 2.2 MW 28 32 35 27 29 26 31 24 23 44 30 34 33 WASTE HEAT 44 Goodsprings Energy Recovery Station 7.5 MW WIND 45 Spring Valley Wind 151.8 MW In development 21

Fuel Portfolio FUEL NV Energy works to provide clean, safe and reliable PORTFOLIO RENEW energy at predictable prices. The price of electricity 9% PURCHASED 24% is influenced by both regulatory requirements and HYDRO market fluctuations. We saw a decrease in demand GAS COAL 1% 51% 15% for electricity from our customers in 2011. The chart indicates that 51 percent of our fuel mix was made up of natural gas and oil generation. Due to the market price of natural gas, we assume that most, if not all of our purchased power came from natural gas combustion. We have increased the percentage of energy from renewable sources to 9 percent in 2011. Our renewable energy came from geothermal, solar, wind, biomass, waste heat and other renewable sources. The renewable amount of the fuel portfolio does not include renewable credits received for energy efficiency and on-site renewable generation by customers. The increase in purchased power and decrease in coal generation came about because of market conditions. The fuel cost of natural gas continued to be favorable compared to coal. Test Drive: PHEV Chrysler Event Chrysler Group LLC selected NV Energy to take part in a national demonstration of its Plug-In Hybrid Electric Vehicle (PHEV) Ram 1500 pickup trucks. Chrysler supplied five trucks to NV Energy s fleet as part of the program for real-world evaluation and testing of the trucks for a three year period. The PHEV Ram 1500 pickups are part of a national demonstration fleet of 140 vehicles that will be President and CEO Michael Yackira accepts the keys from Chrysler Group LLC for used during the next three years five new Plug-In Hybrid Electric Vehicle (PHEV) Ram 1500 pickup trucks. to evaluate customer usage, drive cycles, charging, thermal management, fuel economy, emissions and impact on the region s electric grid. NV Energy was a natural fit for this program as we are already using a number of EVs and PHEVs in our fleet. The new trucks will be used by our construction, electric operations and renewable energy departments. 22

BUILD STRONG CUSTOMER RELATIONSHIPS NV Energy is committed to developing a breadth of energy product and service options that will create greater value for our customers. To this end, we continue to take the steps necessary to operate in an environmentally sustainable manner while providing customers with stable and competitive prices. We take great pride in helping our customers reduce their energy use and their monthly bills with energy efficiency and conservation initiatives. Key Performance Indicators 2011 Goals Performance 2012 Goals Achieve the top decile nationwide in operating performance by 2020 through year over year improvement of customer satisfaction rating Achieve goal of 25% of the Renewable Portfolio Standard to come from energy conservation Continue southern Nevada deployment of smart meters, begin northern Nevada deployment of smart meters Release smart meter tools Through the customer satisfaction survey, NV Energy scored 2% higher in 2011 over 2010 Energy conservation is on target to meet this goal 695,303 smart meters installed in southern Nevada by December 2011 Began northern Nevada installation Smart meter tools and alerts successfully implemented in southern Nevada in 2011 Achieve year over year improvement in measurable customer satisfaction Achieve goal of 25% of the Renewable Portfolio Standard to come from energy conservation Install 1.45 million smart meters to all customers statewide Successfully implement Opt Out process by defined timeframe designated by the PUCN Release smart meter tools in northern Nevada Release of marketing relating to the smart meter tools to increase customer awareness and participation 23

Customer Surveys NV Energy conducts quarterly customer satisfaction surveys of residential and small-medium business customers via telephone, and an annual survey of major account customers via web and direct mail. Last year, NV Energy exceeded the corporate perception goal for overall customer satisfaction and achieved a 2 percent increase compared to 2010. This positive trend reflects our efforts to improve customer relationships. NVEnergize NV Energy continued implementation of its NVEnergize smart meter initiative. NVEnergize will provide our customers with tools and technology to better manage their energy use, potentially saving money and helping the environment. The program will also create operational efficiencies for NV Energy, enhance customer service options and improve reliability. We installed 695,303 electric smart meters in southern Nevada in 2011 and in December began installing electric smart meters and smart gas modules in northern Nevada. NV Energy plans to install 1.4 million meters statewide by the end of 2012. NV Energy has gone from being a fast follower with regard to consumer confidence and meter deployment, to being on the leading edge of creating a new level of customer engagement. Online smart meter tools were made available to 75 percent of customers with smart meters by end of the year. The remaining customers will gain access as meter data and encryption are verified, which is part of the consumer confidence process. In response to customer concerns regarding health, accuracy, security and privacy, the Public Utilities Commission of Nevada (PUCN) opened an investigatory docket to evaluate NVEnergize. The result of the investigation concluded that the NVEnergize program has taken reasonable and appropriate steps to ensure the smart meter (AMI) network is safe, secure, private and accurate. In a 2-1 vote the PUCN determined that a trial opt-out program is warranted to determine the need for a permanent, non-standard metering option. Nevada legislators and staff learn more about our smart meter program at an NVEnergize Envision event held in Carson City. Smart meter installation. NV Energy received a grant from the Department of Energy for nearly half the cost of the $300 million project. The company anticipates the remainder of the costs will come from future operational savings. 24