Regulated,Capital-Intensive Businesses We have two major operations,BNSF and Berkshire Hathaway Energy("BHE"),that share important not needed because each company has eaming power that even under terribendin will farxceed year,fo ed.) The first is essential se esevice on an exclusive basis.The second is enjoyed by few other utilities rom be by any s enty,we have furthe serving 85%of Alberta's population.This multitude of profit streams.supplemented by the inherent advantage of Every day,our two subsidiaries power the American economy in major ways: BNSF carries about 15%(me sured by ton-miles)of all inter-city freight,whether it is transported by e.Ind d,we move more ton s of goods tha n anyone clse,a fac est a to the same job guzzle about four times as much fuel. BHE's utilities serve regulated retail customers in eleven states.No utility c ny stretches further in addition,we are a leader in renewables:Fro BHEountry's nding start ten years ao BHE now: counts for 6%of on capa my.Beyon nhe beat goes n Welonime to buyad buld utlity pertionsthrouhout the electric businesse s in the U.K.and 证mmw-除山二o pletes certain renewables projects that are underway,the company's renew will ha avecost $15 billion.in ad diton,we have conventional projects in the we and,on th amount of trust in future regulation. nbottanporaion s iustified both by wledge that will f need massive investment terest of will ensure t continuea ow project t our operation a way e approv rregulators arRegulated, Capital-Intensive Businesses We have two major operations, BNSF and Berkshire Hathaway Energy (“BHE”), that share important characteristics distinguishing them from our other businesses. Consequently, we assign them their own section in this letter and split out their combined financial statistics in our GAAP balance sheet and income statement. A key characteristic of both companies is their huge investment in very long-lived, regulated assets, with these partially funded by large amounts of long-term debt that is not guaranteed by Berkshire. Our credit is in fact not needed because each company has earning power that even under terrible economic conditions will far exceed its interest requirements. Last year, for example, BNSF’s interest coverage was more than 8:1. (Our definition of coverage is pre-tax earnings/interest, not EBITDA/interest, a commonly used measure we view as seriously flawed.) At BHE, meanwhile, two factors ensure the company’s ability to service its debt under all circumstances. The first is common to all utilities: recession-resistant earnings, which result from these companies offering an essential service on an exclusive basis. The second is enjoyed by few other utilities: a great diversity of earnings streams, which shield us from being seriously harmed by any single regulatory body. Recently, we have further broadened that base through our $3 billion (Canadian) acquisition of AltaLink, an electric transmission system serving 85% of Alberta’s population. This multitude of profit streams, supplemented by the inherent advantage of being owned by a strong parent, has enabled BHE and its utility subsidiaries to significantly lower their cost of debt. This economic fact benefits both us and our customers. Every day, our two subsidiaries power the American economy in major ways: • BNSF carries about 15% (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy’s circulatory system. BNSF, like all railroads, also moves its cargo in an extraordinarily fuel-efficient and environmentally friendly way, carrying a ton of freight about 500 miles on a single gallon of diesel fuel. Trucks taking on the same job guzzle about four times as much fuel. • BHE’s utilities serve regulated retail customers in eleven states. No utility company stretches further. In addition, we are a leader in renewables: From a standing start ten years ago, BHE now accounts for 6% of the country’s wind generation capacity and 7% of its solar generation capacity. Beyond these businesses, BHE owns two large pipelines that deliver 8% of our country’s natural gas consumption; the recently￾purchased electric transmission operation in Canada; and major electric businesses in the U.K. and Philippines. And the beat goes on: We will continue to buy and build utility operations throughout the world for decades to come. BHE can make these investments because it retains all of its earnings. In fact, last year the company retained more dollars of earnings – by far – than any other American electric utility. We and our regulators see this 100% retention policy as an important advantage – one almost certain to distinguish BHE from other utilities for many years to come. When BHE completes certain renewables projects that are underway, the company’s renewables portfolio will have cost $15 billion. In addition, we have conventional projects in the works that will also cost many billions. We relish making such commitments as long as they promise reasonable returns – and, on that front, we put a large amount of trust in future regulation. Our confidence is justified both by our past experience and by the knowledge that society will forever need massive investments in both transportation and energy. It is in the self-interest of governments to treat capital providers in a manner that will ensure the continued flow of funds to essential projects. It is concomitantly in our self-interest to conduct our operations in a way that earns the approval of our regulators and the people they represent. 12