Text

1998 Decommissioning Funding Status Rept for Yr Ending 981231 for Quad Cities Nuclear Power Station,Units 1 & 2
	ML20205D131
Person / Time
Site:	Quad Cities
Issue date:	12/31/1998
From:	Cindy Montgomery; AFFILIATION NOT ASSIGNED
To:	;
Shared Package
ML20205D125	List: ML20205D119; ML20205D131;
References
	NUDOCS 9904020123
	Download: ML20205D131 (200)
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I 1998 DECOMMISSIONING FUNDING STATUS REPORT 10 CFR 50.75(f)(1)

(For The Year Ending December 31,1993)

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QUAD CITIES NUCLEAR POWER STATION, UNITS I & 2 Submitted by MidAmerican Energy Company Dated: March 30,1999

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9904020123 990330 PDR. ADOCK 05000254 I

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OVERVIEW This Decommissioning Funding Status Repon is being submitted pursuant to 10 CFR 50.75(f)(1) by MidAmerican Energy Company (MEC), a twenty-five percent owner of Quad Cities Nuclear Power Station, Units 1 & 2 (Quad Cities).

CERTIFICATION MidAmerican Energy Company hereby certifies that financial assurance for decommissioning its 25% share of Unit One oiQa.d Cities is provided in the amount of

$93,067,750 in 1998 dollars. MidAmerican Energy Co.npany hereby certifies that financial assurance for decommissioning its 25% share of Unit 1 wo of Quad Cities is provided in the amount of $148,434,000 in 1998 dollars. These amounts are based upon a site-specific decommissioning cost study the results of which exceed the Nuclear Regulatory Commission (NRC) minimum formula amount calculated in accordance with 10 CFR 50.75(c), NUREG-1307, Rev. 8, and Regulatory Guide 1.159. MEC believes that the NRC minimum formula amount should be viewed as merely an assurance that minimum adequate funds will be available when needed. MEC further bel: ves that each site is managed differently and NRC minimums cannot be used as a basis for responsible decommissioning funding or planning.

ADDITIONAL INFORM ATION 1.) Amount of decommissioning funds estimated to be required pursuant to 10 CFR 50.75(b) and (c).

In a report dated January,1997 and updated in October 1997, TLG Services, Inc.

prepared a site-specific Decomraissioning Cost Ftudy for Quad Cities. This study includes cost estimates for basic NRC radiological decommissioning within the meaning of 10 CFR 50.75(b) & (c) (hereafter, Basic Radiological Decommissioning), as well as for spent fuel management and for non-radiological decommissioning activities. The site-specific decommissioning cost to which funds are being accumulated exceeds the NRC minimum formula amount,;alculated in accordance with 10 CFR 50.75(c),

NUREG-1307, Rev. 8, and Regulatory Guide 1.159. The 1998 total deconunissioning costs and t 3asic Radiological Decommissioning costs for MEC's 25% share of Quad Cities can be broken down as follows:

Total Site Specific Basic Radiological Unit 1 593,067,750 588.579,250 Unit 2

$148,434,000

$118.770,500 Totals

$241,501,750

$207,349,750 2

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.c 2.) Amount accumulate:I to the end of the calendar year preceding the date of the report.

As of December 31,1998, MEC had accumulated: $120,077,220.

External Trust Fund Balance (Fair Market value)

Unit 1

$60,005,978 Unit 2 St 0,071,243 l

Totals l

$120,077,220 j

3.) Schedule of the annual amount remaining to be collected.

Within the meaning of 10 CFR 50.75(c)(1)(i)(A), MEC collects the estimated total cost of decommissioning through rates established by " cost of service" or similar ratemaking regulation. The Iowa Utilities Board has currently approved the collection of $4.147 million per year in decommissioning funds for each unit, by order dated June 27,1997 in Docket No. APP-96-1, RPU-96-8. The Illinois Commerce Commission has currently approved the collection of $1.555 million per year in decommissioning funds for each unit,2, order dated October 22,1997 in Docket No. 96-0577.' MEC plans to continue making annual collections through the year 2012. However, these amounts may be re-

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adjusted from time to time based upon ratemaking rulings, inflation, decommissioning fund earnings performance, updates to the site specific decommissioning cost estimate, or other factors.

4.) Assumptions used regardin; rates of escalation in decommissioning costs, rates of earnings on decommissioning funds, and rates of other factors used in funding projections.

The following assumptions were reviewed and approved by the ICC by Order dated October 22,1997 in Docket No. 96-0577. The same assumptions have been utilized in proceedings before the Iowa Utilities Board.

Decommissioning Cost Escalation Rate 5.30 %

Decommissioning Fund Earnings Rate 6.49 %

5.) Any contracts upon which the licensee is relying pursuant to 10 CFR 50.75(e)(1)(v).

' There is currently pending, before the Illinois Commerce Commissim, an MEC application to revise the amount collected in Illinois.

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MEC is not relying upon any long-term contract for purposes of providing

. decommissioning funding within the meaning of 10 CFR 50.75(e)(1)(v).

6.) Any modifications occurring to a licensee's current method of providing financial assurance since the last submitted report.

MEC continues to use the external sinking fund method of providing decommissioning funding assurance.

i 7.) Any Material Changes to trust agreements.

i Harris Trust and Savings Bank was appointed the original trustee of the Quad Cities trusts on March 15,1989. Harris Trust and Savings Bank was succeeded by The Northern Trust Company, effective December 29,1995 and The Northern Trust Company was also subsequently succeeded by The Bank of New York effective February 1,1999. Copies of The Northern Trust Company trust agreements and The Bank of New York agreements are provided in Appendix A. In addition, the following table identifies the current Investment Managers.

Trust l

Trustee Investment Manager (s)

Unit 1 Qualified l The Bank of New York Harris Investment Mgmt.

l NISAInvestment Advisors Unit 1 Non-Qualified l The Bank of New York Harris Investment Mgmt.

I NISA Investment Advisors

, Unit 2 Qualified j The Bank of New York Harris Investment Mgmt.

I NISA Investment Advisors Unit 2 Non-Qualified i The Bank of New York Harris Investment Mgmt.

I l NISA Investment Advisors MIDAMERICAN ENERGY COMPANY By:

Charles R. Montgomery, Senior Managing rney MidAmerican Energy Company 666 Grand Avenue, Suite 2800 l

Des Moines, Iowa 50309 (515) 281-2976

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i APPENDLX A Trust Agreements

Unit 1 Tax Qualified TAX QUALIFIED TRUST AGREEMENT THIS TRUST AGREEMENT (" Agreement") is made this 29th day of December,1995 between MidAmerican Energy Company, an Iowa corporation (the " Company"), and The Northern Trust Company, an Illinois corporation, having trust powers (hereinafter, together with any successors in office, called the " Trustee").

WHEREAS, the Company is the owner in whole or in part of each of the Plants (as hereinafter defined);

WHEREAS, the Company is subject to regulation by the Illinois Commerce Commission

("ICC"), the Iowa Utility Board ("IUB"), the Nuclear Regulatory Commission ("NRC") and the Federal Energy Regulatory Commission ("FERC");

3 WHEREAS, under the Code (as hereinafter defined), including Section 468A thereof, certain income tax benefits are available to the Company by funding qualified " nuclear decommissioning reserve funds;" and WHEREAS, this Agreement is entered into and intended to be and remain qualified under Section 468A of the Code and the regulations promulgated thereunder, and any successor or amendments thereto; and WHEREAS, the Company previously established, pursuant to the Illinois Statute, Iowa Statute and Future Orders, a tax qualified trust (" Trust") for each Plant (as hereinafter defined) pursuant to a trust agreement dated as of March 15,1989 between the Company and Harris Trust & Savings Bank (" Harris"); and WHEREAS, the Company wishes to substitute the Trustee for Harris, and the Trustee is agreeable to such substitution, and in so doing, the parties wish to continue the existence and administration of the Trusts pursuant to this Agreement; and WHEREAS, the Company has established, pursuant to the Illinois Statute, Iowa Statute and Future Orders, a non-tax qualified trust for each Plant (as defined herein) pursuant to a trust agreement dated as of March 15,1989 between the Company and Harris; and WHEREAS, the Company has substituted Trustee for Harris, and the Trustee has agreed to such substitution, with respect to the non-tax qualified trusts pursuant to the trust agreement dated December 29,1995 between the Company and Trustee; NOW, THEREFORE. the Company shall deliver to the Trustee and, upon receipt, the Tmstee shall acknowledge reeipt of the funds described on Schedules 1 through 5, inclusive, representing the assets of the Trusts (as hereinafter defined);

TO HAVE AND TO HOLD, such Trusts and such additional funds as may from time to time be added thereto as provided herein, together with the proceeds and reinvestments thereof (hereinafter collectively called the " Trust Fund") unto the Trustee; IN TRUST NEVERTHELESS, for the use and purpose and upon tN terms and conditions hereinafter set forth; ARTICLE 1: DEFINITIONS. NAME AND PURPOSES 1.1. Definitions. As used in this Agreement, the following terms shall have the following meanings.

" Agreement," " Trust Agreement" and the terms " hereof," "herein," " hereto" and

" hereunder," when used in this Agreement, shall mean and include this Agreement as the same may from time to time be amended, modified or srpplemented.

" Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and regulations promulgated thereunder. "Section 468A" shall mean that section of the Code as it may be amended from time to time, any successor provision thereto and the regulations promulgated thereunder.

" Disbursement Certificate" shall mean a document properly completed and executed by the Company substantially in the form of Exhibit A hereto.

" Excess Contribution" shall have the meaning set forth in Section 2.4 hereof.

" Future Orders" shall mean any orders or rulings of the ICC, IUB, NRC or FERC existing or issued, and any Federal or state laws existing or adopted, in connection with the retention, investment and utilization of funds for the costs of decommissioning any Plant.

" Illinois Statute" shall mean Section 8-508.1 of the Illinois Public Utilities Act (220 ILCS 5/8-508.1) as it may hereafter be amended.

" Iowa Statute" shall mean all applicable sections of Chapter 476 and 476A of the Code of Iowa, as it may hereafter be amended.

"NRC Rule" shall mean the " General Requirements for Decommissioning Nuclear Facilities" of the NRC (53 Fed. Reg. 24018, June 27,1988) as it may hereafter be amended.

"Plam ' shall meam ach, and " Plants" shall mean all, of the Quad Cities Nuclear Generating Station Unit One and the Quad Cities Nuclear Generating Station Unit Two.

" Qualified Costs" shall mean the Company's costs incurred in the decommissioning of a Plant, to the extent that such costs may be paid out of a Trust pursuant to Section 468A.

" Service" shall rr.can the Internal Revenue Service.

" Trust" shall mean each, and " Trusts" shall mean all, of the MidAmerican Energy Company Tax Qualified Decommissioning Trust - Unit One and the MidAmerican Energy Tax Qualified Decommissioning Trust - Unit Two; each such trust has been established and shall continue to be maintained as a qualified nuclear decommissioning reserve fund pursuant to Code Section 468A.

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" Trust Fund" shall be used herein merely to refer to the Trusts in the aggregete and is not intended nor should it be construed to constitute a separate entity.

" Withdrawal Certificate" shall mean a document properly completed and executed by the Company substantially in the form of Exhibit B hereto.

1.2 Names of Trusts. Each Taist shall be known as the " MidAmerican Energy Company Tax Qualified Decommissioning Trust - Quad Cities Unit One" and " MidAmerican Energy Company Tax Qualified Decommissioning Tmst - Quad Cities Unit Two." The Trusts, collectively, shall be known as the " MidAmerican Energy Company Tax Qualified Decommissioning Trust Fund."

1.3 Purnose of Trust Agreement. The purpose of this Trust Agreement is to provide 1

funds for the contemplated decommissioning of the Plants listed on the separate Schedules attached hereto and to comply with the Illinois Statuta % Iowa Statue, the NRC Rule and any Future Orders, and to constitute " nuclear decommis!.

ng reserve funds" within the meaning u

j of Section 468A. The assets of the Trusts may be used only in a manner that is authorized by Code Section 468A and the regulations thereunder.

ARTICLE II: ESTABLISHMENT OF SEPARATE TRUSTS AND DISPOSITIVE PROVISIONS The Trustee shlt manage, invest and reinvest and, after payment of the expenses described in Section 4.1 hereof, distribute each Trust as follows:

2.1 Seoarate Trusts. The Company has established a separate trust for each Plant. Each time the Company makes a contribution to the Trust Fund, it shall designate the amount of such contribution allocable to each such separate Trust. The Trustee shall maintain separate records for each Trust and shall credit Wereto its pro rata share of all income of the Trust Fund and charge thereto its pro rata share of all expenses (other than expenser attributable to a particular Plant which shall be expenses charged to the Trust named for such Plant) and any losses. The Trustee shall not be precluded from pooling the assets of the Trusts with one another for investment purposes, and may treat each Trust as having received or accrued a ratable purtion of the Trust Fund income in any year. The pooling arrangement undertaken as pe'.mitted in this Section 2.1 can be terminated at any time by any Trust. No Trust in the pooling arrangement may substitute for itself in such arrangement any person that is not a member of that pooling arrangement.

2.2 Payment of Nuclear Decommissioning Costs. The Trustee shall make payments of Qualified Costs in accordance with the following procedures:

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(a) Disbursements to Third Parties. The Trustee shall make payments of Qualified Costs to any person (other than the Company) for goods provided or labor or other services rendered to the Company in connection with the decommissioning of a Plant within five business days of the receipt of the Disbursement Certificate.

(b) Reimbursement to the Comoany. The Trustee shall make payments to the Company in reimbursement of Qualified Costs actually incurred by the Company and paid to any o'her person within five business days of receipt of a Withdrawal Certificate.

The Tr.istee shall be under no duty to inquire into the correctness or accuracy of mat:ers contained in a Disbursement Certificate or Withdrawal Certificate unless representatives of the Trustee then approving any withdrawal or disbursement based on such certificate have actual knowledge of the falsity of any statements made herein. The Company will indemnify the Trustee and hold it harmless from any tax imposed pursuant to Section 4951 of the Code with respect to a disbursement or reimbursement made by the Trustee pursuant to this Section 2.2 in reliance on a Disbursement Certificate or a Withdrawai Certificate, respectively, provided representatives of the Trustee then approving such disburse.nent or reimbursement do not have actual knowledge of the falsity of any statements made in the related Disbursement Certificate or Withdrawal Certificate that would have prevented the imposition of such tax.

2.3 Additions to Trusts. From time to time prior to the termination of each Trust held hereunder, the Company may make, and the Tmstee shall accept, additional contributions of funds to any separate Trust held hereunder to satisfy the purpose of this Trust Agreement as set forth in Section 1.3 hereof. The making of a contribution by the Company shall constitute the certification of the Company that all necessary consents and approvals to such contribution have been obtained.

2.4 lubseauent Adiustments. The Trustee and the Company understand that the contributions made by the Company and allocated to a Trust from time to time may subsequently be d, ermined to exceed the amounts determined pursuant to Section 468A of the Code and paragr..jh (c)(2)(ii) of {1.468A-5T thereunder (any such excess being hereinafter referred to as an " Excess Contribution"). Upon the written certification of the Company setting forth the amount of the Excess Contribution, the Trustee shall distribute such amount to the Trustee of the MidAmerican Energy Company Non-Tax Qualified Decommissioning Trust Fund created and existing pursuant to a trust agreement dated December 29,1995 between the Company and the Trustee named therein, or, if so requested in such written certification, transfer all or a portion of such amount to one or more other separate Trusts held hereunder.

Any income attributable to any such Excess Contribution shall be allocated to the Trust to which such Excess Contribution relates.

2.5 Payment of Taxes. The Trustee shall pay out of each separate Trust any federal and, if applicable, state income taxes on the income of such Trust including estimated payments as and when due in accordance with the returns prepared in accordance with Section 3.5 hereof.

2.6 No Transferability ofInterest in any Trust. Except to the extent that any transfer of interest of the C-ompany is approved where required by the ICC, IUB NRC and FERC, the interest of the Company in any Trust is not transferable, whether voluntarily or involuntarily, by the Company nor subject to the claims of creditors of the Company; orovided. however, that any creditor of the Company as to which a Disbursement Certificate for a Trust has been properly campleted and submitted to the Trustee may assert a claim directly against such Trust in an amount not to exceed either the amount specified on such Disbursement Certificate or the amount of such Trust available to pay costs other than amounts then owing the Trustee under Section 3.2 hereof.

2.7 Time of Termination. Each Trust hereunder shall terminate to the extent provided in this Section 2.7 upon the earlier to occur of the folluwing events:

(a) In whole, upon the substantial completion of the nuclear decommissioning of the Plant for which such Trust was created and named as provided in Section 468A(e)(7) of the Code and as evidenced to the Trustee by the written certification of the Company.

(b) To the extent allowed or provided under Section 468A of the Code, the Illinois Statute, the Iowa Statute, the NRC Rule or any Future Order.

The Trust Fund shall terminate when all of the separate Trusts have terminated.

2.8 Distribution of Trust Uoon Termination. Upon termination of each Trust, the Trustee shall distribute the entire remaining amount of the trust, including all accrued, accumulated and undistributed net income, to the Company; provided. however, that no such distribution shall be made unless either (a) an order of the ICC, IUB or the NRC and FERC specifically authorizing such distribution is in effect, as evidenced to the Trustee by the written certification of the Company, and which certification specifies further that all necessary consents and approvals to such distribution have been obtained, or (b) the Company has furnished the Trustee with an opinion of legal counsel to the effect that no such orders are necessary to authorize such distribution and that all necessary consents and approvals to such distribution have been obtained.

2.9 Alterations and Amendments. The Trustee and the Company understand and agree that amendments may be required to this Agreement from time to time to effectuate the purpose of this Trust Agreement and to comply with amendments to or changes in the Illinois Statute, the Iowa Statute, the NRC Rule, any Future Orders, changes in tax laws (including Section 468A of the Code), regulations or rulings (whether published or private) of the Service, and any other changes in the laws applicable to the Company, the Plants or the Trusts created hereunder. The Company and the Trustee may amend this Agreement to the extent necessary or desirable to effectuate such purpose or to comply with such changes; provided.

however, in any event, the Trustee may decline to adopt such amendment, if such amendment increases the expenses or responsibilities of the Trustee and no provision satisfactory to the Trustee has been made to compensate the Trustee for such increase, or if the Trustee determines it would be unable with reasonable effort to comply with its duties as to be amended. This Agreement may not be amended in a manner that would violate Code Section 468A or the regulations thereunder.

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i 2.10 No Authority to Conduct Business. The purpose of this Trust Agreement is limited i

to the matters set forth in Section 1.3 hereof. Thi; Agreement shall not be construed to confer j

upon the Trustee any authority to conduct business.

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ARTICLE III: GENERAL PROVISIONS RELATING TO THE TRUSTEE The appointment of any successor Trustee, provisions governing resignation and compensation of the Trustee and the general rules governing the relationships of the Trustee and the Company and any third parties are as follows:

1 3.1 Designation and Oualification of Successor Trustees. At any time during the term of this Agreement, the Company shall have the right to remove the Trustee acting hereunder and appoint another qualified entity as a successor trustee upon 30 days notice in writing to the Trustee, or upon such shorter notice as may be acceptable to the Trustee. Any Trustee shall have the right to resign at any time upon 30 days notice in writing to the Ccmpany and upon such resignation the Company shall appoint another qualified entity as a successor Trustee.

Notwithstanding the foregoing, no such removal or resignation shall be effective until a successor Trustee is appointed by the Company and, if necessary, approved by appropriate regulatory authorities.

Any successor Trustee shall qualify by a duly acknowledged acceptance of this Agreement and the trusts created hereunder, delivered to the Company. Upon acceptance of such appointment by the successor Trustee, the Trustee shall transfer to such successor Trustee the Trust Fund. Any successor Trustee shall have all the rights, powers, duties and obligations herein granted to the original Trustee.

If for any reason the Company is unable to or does not, in the event of the resignation or removal of the Trustee as provided above, appoint a successor Trustee within 40 days after such resignation or removal, either the Company or the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee.

3.2 Comnensation and Reimbursement. The Trustee shall be entitled to compensation from each Trust held hereunder at such rates as may be approved in writing from time to time by the Company. Subje,:t to the approval of the Company (which shall not be unreasonably withheld or delayed), the Trustee shall be entitled to be reimbursed from each Trust held hereunder for out-of-pocket expenses including, but not limited to, expenses of agents, auditors and counsel, incurred in connection with the administration of such Trust.

3.3 Transactions With Third Parties. No person or organization dealing with the Trustee hereunder shall be required to inquire into or to investigate its authority for entering into any transaction or to see to the application of the proceeds of any such transaction.

3.4 Financial Statements. The Trustee shall furnish monthly financial statements (audited with respect to accounting by the Trustee's internal audit staff) for each Trust to the Company l

not later than the 15th day of the following month, or at such other less frequent interval as the Company may require. The financial statements shall show the financial condition of the Trust including, without limitation, the market value of the assets, and the income and expenses of each Trust for the period since the preceding statement and such other information as may be reasonably requested by the Company. The financial statements shall be audited annually by independent certified public accountants employed by the Trustee, subject to the limitations contained in Section 4.8 hereof. The Trustee shall furnish such financial statements as required by law or regulation to the Company.

3.5 Regulatory Reports. The Trustee shall furnish reports to the ICC in complise with 220 ILCS 5/8-508.1(e). The Trustee shall provide any such reports to the Company prior to filing with the ICC.

3.6 Tax Returns and Other Reoorts. The Trustee shall prepare or cause to be prepared such income or other tax returns and such reports for the Trusts as may be required from time to time and shall provide copies thereof to the Company in advance of their filing for review by the Company. The Trustee shall provide to the Company all statements, documents, lists or other information reasonably requested by the Company. The Trustee shall also sign all such returns and file them or cause them to be filed with the appropriate government agencies.

The Trustee shall cooperate with all requests made by regulatory agencies and shall provide copies to the Company in advance of all information submitted to regulatory agencies. At the Company's request, the Trustee shall testify with respect to the Trusts and the Trust Fund in proceedings before regulatory agencies.

3.7 Nominees. Deoositories. If the Tmstee employs an agent or depository specifically for purposes of providing services related to any Trust held hereunder (other than a securities broker), the Trustee shall disclose to such agent or depository that it is employed on behalf of such Trust.

3.8 Future Orders. The Company shall promptly advise the Trustee in writing of the existence of any Future Order having the effect of imposing new or different responsibilities upon the Trustee under this Agreement.

3.9 Apoointment ofInvestment Manager. The Company shall have the right from time to time to appoint and remove one or more investment managers for any Trust held hereunder and to direct the segregation of any part or all of any such Trust into one or more accounts to be known as " investment manager accounts" and if it does so, it shall appoint an individual, partnership, association or corporation as investment manager to manage the portion of any Trust so segregated. Written notice of any such appointment and/or removal shall be given to the Trustee and the investment manager so appointed. The appointment shall be accomplished using an investment manager agreement signed by the Company and the investment manager and acknowledged.by the Trustee. As long as the investment manager is acting, the investment manager shall have full authority to direct the acquisition, retention and disposition of the assets from time to time comprising the investment manager account being managed by the investment manager, and except as set forth in the following paragraph, the Trustee slull have no duty or obligation to review the assets from time to time comprising such investment manager account, to make any recommendations with respect to the acquisition, retention and disposition thereof, nor to determine whether any direction from the investment manager is proper or within the terms of this Agreement.

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i The Trustee shall have no liability or responsibility to the Company or the Trusts for acting on the direction of, or for failure to act in the absence of directions from, the investment manager for any investment manager account. The Trustee may assume that any investment manager account previously established and the appointment of any investment manager for that account continues in force until receipt of written notice to the contrary from the Company. Pending receipt of directions from the investment manager, any cash received by the Trustee from time to time for any investment manager account shall be invested upon receipt in instruments maturing in three banking days or less. The Trustee shall review the assets in any such investment manager account immediately after their purchase only for the

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purpose of determining whether such assets are permissible investments under the guidelines established for such account and the provisions of Section 4.3 hereof. In the event that the Trustee determines as a result of any such daily review that an investment is not permitted under either the guidelines established for such account or the provisions of Section 4.3 hereof, then it shall notify the Company and the applicable investment manager within one j

i business day of such determination by telephone, confirmed in writing. If the applicable j

investment manager does not sell the unpermitted investment within two business days of such oral notice, then the trustee shall sell such unpermitted investment within four business days of such oral notice. The Trustee shall advise the investment manager of information it receives from an issuer or similar source regarding calls, redemptions, purchase offers and similar matters relating to assets held in any Trust hereunder. The Company will indemnify the j

Trustee and hold it harmless from any liability or expense in connection with or arising out of (i) any action taken or omitted or any investment or disbursement of any part of the investment manager account made by the Trustee at the direction of the investment manager, or (ii) any action taken by the Trustee pursuant to notification of an order issued by an investment manager to purchase or sell securities directly to a broker or dealer under a power of attorney.

i 3.10 Certain Duties and Responsibilities of the Trustee.

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(a) In the absence of bad faith on its part, the Trustee may conclusively rely upon certificates or opinions furnished by the Company to the Trustee pursuant to this Agreement.

(b) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful miscondw. h carrying out its responsibilities under this Agreement, except that (i) this Subsection shre t

be construed to limit the effect of Subsection (a) of this section and (ii) no provision of thn, Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

3.11 Certain Rights of Trustee. Except as otherwise provided in Section 3.9 hereof:

(a) Any request or direction of the Company mentioned herein shall be sufficiently evidenced by a written request or direction signed, prepared or furnished by an authorized representative of the Company or a verbal or telephonic request or order confirmed within a reasonable time by such a written request or direction, and any 8-

action of the board of directors of the Company may be sufficiently evidenced by a certificate of the Company's secretary or assistant secretary; (b) Whenever in the administration of any Trust created under this Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its party, rely upon the certificate of an authorized representative of the Company; (c) Subject to Section 3.9(b) above, the Trustee may consult with legal counsel and the written advice of such counsel or any opinion of such counsel shall be full and compleie authorization and protection in respect of any action taken or omitted by it hereunder in reliance thereon in the absence of bad faith on the part of the Trustee; (d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of the Company pursuant to this Agreement, unless the Company shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; and (e) In the event that The Northern Trust Company incurs any liability, loss, claim, suit or expense (including reasonable attorneys fees) arising directly out of its provision of services under this Agreement, or its status as Trustee hereunder, under cirwaistances where The Northern Trust Company cannot obtain or would be precluded by law from obtaining payment or reimbursement of such liability, loss, claim, suit or expense (including reasonable attorneys fees) from the Trust Fund, then the Company (which has the authority to do so under the laws of the state of its incorporation) shall indemnify and hold The Northern Trust Company harmless from and against such liability, loss, claim, suit or expense, except to the extent such liability, loss, claim, suit or expense arises directly from a breach or negligence in performance by the Trustee of its responsibilities as created under the terms of this Agreement. This paragraph shall survive the termination of this Agreement.

ARTICLE IV: TRUSTEE'S POWERS The Trustee shall have, with respect to each Trust held hereunder, the following powers, all of which powers are fiduciary powers to be exercised in a fiduciary capacity and in the best interests of each Trust, and which are to be exercised as the Trustee, acting in such fiduciary capacity, in its discretion, shall determine, except that the Trustee shall not act in its discretion but only at the direction of an appointed investment manager in the exercise of those powers given in Section 4.2,4.3,4.4 and 4.5 hereof with respect to the acquisition, retention and disposition of the assets of an investment manager account, and, except as otherwise provided, which are intended in no way to limit the general powers of the office, namely:

4.1 Payment or Provision for Excenses of Administration. To incur, pay or make provision for any and all charges, taxes and expenses upon or connected with each Trust held hereunder in the discharge of its fiduciary obligations under this Agreement, but to charge said 9

amounts to such Trust only to the extent that such amounts are directed to be paid from such Trust by the Company pursuant to Section 3.2 hereof or may be incurred and paid from such Trust without causing the Trust to become disqualified under Section 46"A.

4.2 Prudent Investments. Subject to the limitations provided in Section 4.3 hereof, to invest the assets of each Trust only in assets that are prudent investments for assets held in trust and in such a way as to attempt to maximize the after-tax returns thereon.

4.3 Investment of Trust Fund. Pending use of any Tnist held hereunder for the purpose of this Trust, to invest and reinven all or any part of such Trust, including any undistributed income therefrom; provided. howJ:ye;, that no such investment or reinvestment may be made by the Trustee:

(a) In any investments not permitted under the Code; (b) In any security or asset of any operator of a nuclear power plant; or (c) Which would cont avene any Future Order in effect at the time such investment or reinvestment is made and previously furnished to the Trustee with reference to the Trusts.

Any investment or reinvestment made by an investment manager shall be reviewed by the Trustee for compliance with (a), (b) or (c) above as provided in Section 3.8 hereof.

All investments must be sufficiently liquid to enable each Trust to fulfill the purpose of this Agreement and to satisfy obligations as they become due as communicated in writing to the Trustee. Nothing in this Section 4.3 shall be construed as requiring the Trustee to make any

-investigation as to when any of the Plants may be decommissioned or when obligations relating to such decommissioning may be expected to become due, and absent a written communication from the Company, the Trustee shall invest each separate Trust as though such Trust had no short or intermediate term cash requirements.

4.4 Management of Trusts. To sell, exchange or otherwise dispose of all or any part of any Trust held hereunder, without prior application to or approval by or order of any court, upon such terms and in such manner and at such prices as the Trustee shall determine; to modify, renew or extend mortgages, bonds, notes or other obligations or any installment of principal thereof or any interest 62e thereon and to waive any defaults in the performance of the terms and conditions thereof; and to execute and deliver any and all assignments, bonds or other instruments in connection with these powers, at such times, in such manner and upon such terms and conditions as the Trustee may deem expedient. The Trustee's determinations of manner of sales, terms, prices and the exercise of other powers granted herein, if reasonably made, are not to be questioned.

Notwithstanding anything contained in this Agreement to the contrary, the Trustee in exercising its discretionary authority hereunder may not authorize or carry out any sale, exchange or other transaction between any Trust and a " disqualified person" within the meaning of Section 4951 of the Code except the payment of compensation and expenses pursuar,t to Section 3.2 hereof or unless such transaction is not an act of "self-dealing" within 3

the meaning of Section 4951 of the Code, as such section is made applicable to each Trust by the Illinois Statute. The Trustee, in exercising its discretionary authority hereunder, shall not cause any Trust to engage in any act of self-dealing with the Company or any affiliate of the Company. The Company agrees to furnish the Trustee with the identity of all persons who are

" disqualified persons" within the meaning of said Section 4951 of the Code by reason of their affiliation with the Company.

4.5 Extension of Obligations and Negotiation of Claims. Subject to the limitations contained in Section 4.3 and 4.4 hereof, to renew or extend the time of payment of any obligation, secured or unsecured, payable to or by any Trust, for as long a period or periods of time and on such terms as it shall determine; and to adjust, settle, compromise and arbitrate claims or demands in favor of or against any Trust, including claims for taxes, upon such terms as it deems advisable.

4.6 Registration of Securities. To hold any stocks, bonds, securities and/or other property in the name of a nominee, in a street name or by other title-holding device, without indication of trust.

4.7 ' Location of Assets. To keep any property belonging to any Trust at any place in the United States.

4.8 Retention and Removal of Professional Service Providers. To employ attorneys, accountants and custodians as it shall deem advisable and to make such payments thereof as the Trustee shall deem reasonable for the implementation of the purpose of this Agreement. The Trustee shall have the absolute right to dismiss any such agents for any reason whatsoever; provided that the Trustee's selection of an accounting firm shall be subject to the prior consent of the Company, which consent shall not be unreasonably withheld.

4.9 Delegation of Ministerial Powers. To delegate to other persons such ministerial powers and duties as it may deem to be advisable.

4.10 Discretion in Exercise of Powers. To do any and all other acts which the Trustee shall deem proper to effectuate the powers specifically conferred upon it by this Agreement; provided. however, that this section shall not authorize the Trustee to do any act or participate in any transaction which would (a) contravene any provision of this Agreement; or (b) violate the terms and conditions of, or cause any Trust held hereunder not to satisfy the requirements of, the Illinois Statute, the Iowa Statute, the NRC Rule, any Future Order or any other applicable law, regulation or ruling.

ARTICLE V: MISCELLANEOUS PROVISIONS 5.1 Headings. The section headings set forth in this Agreement are inserted for convenience of reference only and shall be disregarded in the construction or interpretation of any of the provisions of this Agreement.

I 5.2 Particular Words. Any word contained in the text of this Agreement shall be read as I

the singular or plural as may be applicable in the particular context. Unless otherwise specifically stated, the word " person" shall be taken to mean and include an individual, I

partnership, association, trust, company or corporation.

l 5.3 Severability of Provisions. If any provision of this Agreement or its application to j

any person or entity or in any circumstances shall be inve'.d and unenforceable, the application i

of such provision to persons and in circumstances other than those as to which it is invalid or unenforceable and the other provisions of this Agreement, shall not be affected by such invalidity or unenforceability.

j i

5.4 Form and Content of Communications. The name persons authorized to act on behalf of the Company shall be certified, with the specimen signature of any such person, to the Trustee by the Company. Until notified in writing to the contrary, the Trustee shall have the right to assume that there has been no change in the identity or authority of any person j

previously certified to it hereunder.

J j

5.5 Delivery of Notices Under Agreement. Any notice required by this Agreement to be given to the Company or the Trustee shall be deemed to have been properly given when mailed postage prepaid, by registered or certified mail. Notices to the Company shall be addressed to:

MidAmerican Energy Company 666 Grand Avenue i

P. O. Box 657 l

Des Moines, Iowa 50306 Attention: Group Vice President Finance and Accounting l

i Notices to the Trustee shall be addressed to:

j i

The Northern Trust Company 50 South LaSalle Street Chicago, Illinois 60675 Attention: Vice President-Master Trust and Custody Services 5.6 Successors and Assigns. Subject to the provisions of Sections 2.6 and 3.1 hereof, this Agreement shall be binding upon and inure to the benefit of the Company, the Trustee and their respective successors and assigns.

5.7 Countercarts of Agreement. This Agreement has been executed in counterparts, each of which shall be deemed to be an executed original.

5.8 Governing Jurisdiction. The Trusts created hereunder are Illinois trusts and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of the State of Illinois.

e 5.9 Miscellaneous. The Trusts shall operate on an accounting year which coincides with the calendar year.

IN WITNESS WHEREOF, the Company and the Trustee have as of the day and year first j

above written, executed and delivered this Agreement.

1 MidAnerican Energy Company By i

Attest:

/

v v

Northern Trust Ccrnpany By W

MA[E,((

Attest:

i l

}

EXHIBIT A DISBURSEMENT CERTIFICATE The undersigned, being a duly authorized officer of MidAmerican Energy Company, an Iowa corporation (the " Company"), and in such capacity being duly authorized and empowered to execute and deliver this certificate, hereby certifies to the Trustee of the MidAmerican Energy Company Tax Qualified Decommissioning Trust Fund (the " Trust"),

I pursuant to Section 2.2(a) of that certain Trust Agreement dated December 29,1995 (the

" Agreement") between the Company and the Trustee, as follows:

(1) There is due and owing to each Payee (" Payees") [all/a portion of] the invoiced cost to the Company for goods or services provided in connection with the decommissioning of the [name of Plant] as evidenced by the Invoice Schedule (with supporting exhibits) attached as Exhibit I hereto; (2) All such amounts due and owing to such Payees constitute Qualified Costs; (3) All conditions precedent to the making of this disbursement set forth in any agreement between each such Payee and the Company have been fulfilled; (4) No Payee is a " disqualified person" within the meaning of Sections 468A and 4951 of the Code by reason of an affiliation with the Company or, if any are, then the payment constitutes compensation or payment or reimbursement of expenses which are reasonable and necessary to carry out the purpose of the Trust and the payment is not excessive; and (5) The payment of the amounts owing meets the requirements of the Illinois Statute, Iowa Statute and any Future Orders and all necessary consents and approvals for such payment have been obtained.

Accordingly, you are directed to permit the disbursement of $

from the Trust in order to permit payment of such sum to be made to the aforementioned Payees for such purpose. You are further directed to disburse such sum, once withdrawn, directly to such Payees in the following manner: [ describe manner of payment] on or before [date].

Although you are under no obligation to make any further inquiry or investigation or to obtain any further documentatior., it is understood that you may, in your discretion, elect to withhold any such disbursemer.t to any Payee unless and until you receive written releases, in form satisfactory to you, of ny liens, security interests or claims of such Payee against the Company or its property a.c you may in your discretion require.

4 1

t Capitalized terms used herein without definition shall have the meanings given to such terms in the Agreement.

i WITNESS my hand this day of

, 19_.

t i

i t

By:

Duly Authorized Officer 3

b i

e y

1 i

l l

EXHIBIT B WITHDRAWAL CERTIFICATE l

The undersigned, being a duly authorized officer of MidAmerican Energy Company, an Iowa corporation (the " Company"), and in such capacity being duly authorized and I

empowered to execute and deliver this certificate, hereby certifies to the Trustee of the MidAmerican Energy Company Tax Qualified Decommissioning Trust Fund (the " Trust"),

pursur.nt to Section 2.2(b) of that certain Trust Agreement dated December 29,1995 (the

" Agreement") between the Company and the Trustee, as follows:

(1) The Company has paid and is entitled to reimbursement for amounts paid to Payees for goods or services provided in connection with the decommissioning of the

[name of Plant] as described in the Schedule (with supporting exhibits) attached as Exhibit I hereto; (2) All such amounts paid to such Payees constitute Qualified Costs; (3) No Payee was a " disqualified person" within'the meaning of Sections 468A and 4951 of the Code by reason of an affiliation with the Company or, if any were, then the payment constituted compensation or payment or reimbursement of expenses which were reasonable and necessary to carry out the purpose of the Trust and the payment was not excessive; and (4) The payment of the amounts met the requirements of the Illinois Statute, the 1

Iowa Statute and any Future Orders and all necessary consents and approvals for such payment has been obtained.

Accordingly, you are directed to permit the disbursement of $

from 4

the Trust in order to reimburse the Company for such payments. You are further directed to disburse such sum, once withdrawn, directly to " MidAmerican Energy Company" on or before [date).

Capitalized terms used herein without definition shall have the meanings given to such terms in the Agreement.

WITNESS my hand this day of

, 19 By:

Duly Authorized Officer l

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Institutional Trust and Custody IOWA-ILLIMOIS QUALIFIED NDT ACCOUNT NUNGER GTt.TEMENT OF MET ASSETS 29-0087157 TRADE DATE BASIS DECEMBER 29, 1995 h

- - DETAIL HOLDINGS SCHEDULE ***

i INCC*AE CARRVING QUOTE NAstKET COST ACCRUAL VALUE

~~~----*--~~~----

200,000 CLAstK COUNTY NEVADA 101.345 202,890.00 203,770.00 2,750.00 IMPROVEMENT & REF OEM OSLIG 803 5.516 DUS 10-01 1996 130,000 COLORADO SPRINGS COLORADO 109.047 141,781.10 127,804.30 1,079.72 UTILS REV INGtEFUNDED BALANCE A 6.5% DUE t1-15-2015 CALLABLE 11/15/01 102.0000 ANNUAL 100,000 COOK COUNTY ILLINOIS 86.287 119,280.00 73,530.00 0.00 CAP APPREC BOS 2ERC COUPON OID l

DUE 1?-Ot-2004 l

OID 40.8500 08/20/91 350,000 COOK CNTY IL C991TV CONS SCH DIST 106.344 372,204.00 350,000.00 1,847.92 15 PALATINE GENERAL OSLIG BOS O 5.6516 DUE 12-01-2001 130,000 COP? ERAS COVE TX INDPT SCH DIST 115.316 149,910.80 129,383.80 3.315.00 l'

4ENERAL 08LIG B05 OID UT PSFG 8.75% DUE 03-15-2009 CALLABLE 08/15/04 100.0000 ANNUAL OID 99.5240 11/01/94 200,000 UUPAGE CMTV ILLINOIS 100.029 200,058.00 228,352.00 9,000.00

't! M ALT STORMWATER PJ REYfHUE BONOS

$h 9% DUE 01-01-1999 am i

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A MOUNT NUNDER IONA-ILLIMOIS QUALIFIED MDT STATEMENT OF MET ASSETS 29-0087157 i

TRADE DATE BASIS DECEMBER 29, 1995 I

- - DETAIL HOLDINGS SCHEDULE ***

i INCOME CARRYING QUOTE MAREET COST accrual l

VALUE 250,000 MARICOPA CMTV ARIZONA 106.335 270,837.50 186,882.50 7.812.50 7

GENERAL 00LISATION REF SONOS 8.25% DUE 07-01-2000 1

150,000 MASSACHUSETTS SAY TRANSM AUTH MA 117.705 178,557.50 185,424.50 3,500.00 t

f eEN TRANSM Sv5 REv REP eDS SER A 7% DUE 03-01-2007

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300,000 MASSACHUSETTS ST CONS LM 72.553 217,659.00 162.891.00 0.00 CAPITAL APPRECIATION SER S i

DuE Os-01 2OO3 OID 44.8150 05/30/91 I

200,000 MASSACHUSETTS STATE 104.002 209.204.00 202,324.00 1,833.33 eEMERAL OeLIe REP sDS SER a OID 5.5% DuE 1-o1-2007 OID 99.5060 06/01/93 r

37.165 230,423.00 193.812.00 C.OO S20,000 MISSISSIPPI HOME CORP CAP APPREC-REVENUE SDS SER S ETH DUE 09-01 2013 126,000 MISSISSIPPI STATE 109.585 138,958.25 133,126.25 333.33 t

CAP IMPT GEN OSLIG PRE-RE 010 8% DUE 12-15-2009 e

PRE-REFLN1DED 12/15/02 100.0000 m tn 010 99.9990 12/15/92 in n,>

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13 BoostItsstional Tksast and Casstody ACCOUNT NUNSER

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IDHA-ILLIMOIS QUALIFIED NOT CTITEMENT OF MET ASSETS 29-0007157 tract DATE BASIS DECEMBER 29, t 195 i

- - DETAIL HOLDINGS SCHEDULE ***

INCOME CARRVING QUOTE MARKET COST ACCRUAL j

VALUE 125,000 NEVADA STATE 105.236 131.545.00 123,108.25 3.112.50 l

GENERAL COLIG REF 3DS SER A OID 5.4% DUE 07-15-2004 g

OID 98.4840 07/15/94 175,000 NEVADA STATE COLORADO RIVER CONN 108.899 190,223.25 105,487.75 5.162.50 GENERAL 00 LIGATION BONDS OID 5.9% DUE 07-01-2004 OID 99.2650 11/01/94 820,000 NEN CASTLE INDIANA ECON DEV 29.238 181,283.20 142,519.40 0.00 RESIDUAL REV BDS SER C OID I

DUE 03-01-2018 OID 05/01/88 250,000 MEN JERSEV STATE 107.878 269,690.00 263,850.00 5,430.58 OENERAL OBLIGATION BDS 010 UT l

5.75% DUE O2-15-2OOs l

OID 98.8100 12/15/52 100.306 501,530.00 504,275.00 11,000.00 500,000 MEN MEXICO STATE SEVERANCE TA'a REVENUE BONDS SER S OID i

4.4% DUE 07-01-2000 canaaSLE 07/01/98 100.0000 AISIUAL OID 99.7020 09/01/93 4 O Sa D' ee r

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i3 letstItask Jetal Trust send Cesstody STATEMENT OF NET ASSETS IONA-ILLINOIS QUALIFIED NDT ACCOUNT MUMBER 29-0087157 TRADE DATE BASIS oECenoEn 29, 1995

- - DETAIL HOLDINGS SCHEDULE ***

INCOME CARRYIne VALUE QUOTE MARKET COST ACCRUAL 95,000 OKLAHOMA CITY OKLAHOMA 113.335 107,868.25 95,000.00 2.770.83 GENERAL 08LIG BDS 01D Pxa-RE t

7% DUE 08-01-2010 PRE-REFUNDED 09/01/01 100.0000 OID 08/01/91 125,000 ORLANDO FL UTILS COBOIN 107.967 134,958.75 128,530.00 1,812.50 MTR & ELEC REV REF 905 OID 5.8% DUE 10-01-2006 OID 99.0530 12/01/92 120,000 ORLEAMS PARISH LOUISIANA 128.937 154,724.40 141,734.40 4.s75.OO SCHOOL BOARD SONDS MSIA ETM 8.75% DUE O2-01-2004 700,000 ROMULUS MICHIGAN CBSITYS SCHS 43.899 333,832.40 237,165.00 0.00 l

CAPITAL APPRECIATION REF DONDS DUE 05-01-2011 1

OID 31,2000 02/17/93 l

175,000 SALT RIV AZ AGRIC IMPT PMR DIST 106.989 187,230.75 181,007.75 5.031.25 ELEC SYS REV REF SOS A OED 5.75% DUE 01-01-2007 t

OID 99.5210 02/01/93 b

140,000 SALT RIV AZ AGRIC IMPT PMR DIST 112.462 157,446.00 148,580.40 4.550.00

'O Cn ELEC SYS REV REF BDS SER 8

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Isostitutional hust and Custody FENDIMS TRANSACTION SCHEDULE IOWA-ILLINDIS QUALIFIED NDT ACCOUNT NUMBER 29-0007187 i

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SETTLE DATE TRANSACTION DESCRIPTION AMOUNT seemmememmememommemme b

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15 1038965 i

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Unit 1 j

N n-Tax Qualified NON-TAX QUALIFIED TRUST AGREEMENT i

i THIS TRUST AGREEMENT (" Agreement") is made this 29th day of December,1995, j

between MidAmerican Energy Company an Iowa corporation (the " Company"), and The Northern Trust Company, an Illinois corporation, having trust powers (hereinafter, together with any successors in office, called the " Trustee").

i i

WHEREAS, the Company is the owner in whole or in pa;t of each of the Plants (as hereinafter defined);

I I

WHEREAS, the Company is subject to regulation by the Illinois Commerce Commission

("ICC"), the Iowa Utility Board ("IUB"), the Nuclear Regulatory Commission ("NRC") and the Federal Energy Regulatory Commission ("FERC");

WHEREAS, pursuant to the Illinois Statute, the Iowa Statute and Future Orders (as hereinafter defined), the Company has established Qualified Trusts (as hereinafter defined) for each Plant (as hereinafter defined) pursuant to a trust agreement dated March 15,1989 between the Company and the Harris Trust & Savings Bank (" Harris") establishing the Iowa-Illinois Gas and Electric Company Tax Qualified Decommissioning Trust Fund; and j

WHEREAS, the Company has substituted the Trustee for Harris, and the Trustee has agreed to such substitution with respect to the Qualified Trusts (as hereinafter defined) pursuant to the trust agreement dated December 29,1995 between the Company and Trustee (the " Tax Qualified Trust Agreement"); and WHEREAS, pursuant to the Illinois Statute, the Iowa Statute and Future Orders, the Company previously established a non-tax qualified trust (" Trust") for each Plant (as hereinafter defined) pursuant to a trust agreement dated as of March 15,1989 between the

,, Company and Harris; and WHEREAS, the Company wishes to substitute the Trustee for Harris, and the Trustee is agreeable to such substitution, and in so doing, the parties hereto wish to continue the existence and administration of the Trusts pursuant to this Agreement; 4

NOW, THEREFORE, the Company shall deliver to the Trustee and, upon receipt, the Trustee shall acknowledge receipt of the funds described on Schedules 1 through 5, inclusive, representing the assets of the Trusts (as hereinafter defined);

TO HAVE AND TO HOLD, such Trusts and such additional funds as may from time to time be added thereto as provided herein, together with the proceeds and reinvestments thereof (hereinafter collectively called the " Trust Fund") unto the Trustee;

IN TRUST NEVERTHELESS, for the use and purpose and upon the terms and conditions hereinafter set forth; ARTICLE I: DEFINITIONS. NAME AND PURPOSES i

1.1. Definitions. As used in this Agreement, the following terms shall have the following meanings.

" Agreement," " Trust Agreement" and the terms " hereof," "herein," " hereto" and

" hereunder," when used in this Agreement, shall mean and include this Agreement as the same j

may from time to time be amended, modified or supplemented.

" Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to 1-time, and regulations promulgated thereunder.

" Disbursement Certificate" shall mean a document properly completed and executed by the Company substantially in the form of Exhibit A hereto.

" Future Orders" shall mean any orders or rulings of the ICC, IUB, NRC or FERC existing or issued, and any Federal or state laws existing or adopted, in connection with the retention, investment and utilization of funds for the costs of decommissioning any Plant.

" Illinois Statute" shall mean Sct' n 8-508.1 of the Illinois Public Utilities Act (220 ILCS 5/8-508.1) as it may hereafter be a.aded.

" Iowa Statute" shall mean all applicable Sections of Chapters 476 and 476A of the Code of Iowa, as it may hereafter be amended.

"NRC Rule" shall mean the " General Requirements for Decommissioning Nuclear Facilities" of the NRC (53 Fed. Reg. 24018, June 27,1988) as it may hereafter be amended.

" Plant" shall mean each, and " Plants" shall mean all, of the Quad Cities Nuclear Generating Station Unit One and the Quad Cities Nuclear Generating Station Unit Two.

" Qualified Costs" shall mean the Company's ccsts incurred in the decommissioning of a Plant, to the extent that such costs may be paid out of a Trust without contravening the Illinois

. Statute, the Iowa Statute or any Future Order.

" Qualified Trust" shall mean each, and " Qualified Trusts" shall mean all, of the separate funds established for each of the Plants pursuant to the Qualified Trust Agreement.

" Service" shall mean the Internal Revenue Service.

" Trust" shall mean each, and " Trusts" shall mean all, of the MidAmerican Energy Company Non-Tax Qualified Decommissioning Trust T tit One and the MidAmerican Energy Non-Tax Qualified Decommissioning Trust - Uim Two.

2-

i

" Trust Fund" shall be used herein merely to refer to the Trusts in the aggregate and is not intended nor should it be construed to constitute a separate entity.

j i

" Withdrawal Certificate" shall mean a document properly completed and executed by the i

_ Company substantially in the form of Exhibit B hereto.

J 1.2 Names of Trusts. Each Trust shall be known as the "MidAmerican Energy Company i

Non-Tax Qualified Decommissioning Trust - Quad Cities Unit One" and " MidAmerican i

Energy Company Non-Tax Qualified Decommissioning Trust - Quad Cities Unit Two." The i

Trusts, collectively, shall be known as the "MidAmerican Energy Company Non-Tax l

Qualified Decommissioning Trust Fund."

l j

1.3 Purnose of Trust Agreement. ' The purpose of this Trust Agreement is to provide funds for the contemplated decommissioning of the Plants listed on the separate Schedules attached hereto and to comply with the Illinois Statute, the Iowa Statute, the NRC Rule and any Future Orders.

1 ARTICLE II: ESTABLISHMENT OF SEPARATE TRUSTS AND DISPOSITIVE l

PROVISIONS -

i f

The Trustee shall manage, invest and reinvest and, after payment of the expenses described 3

in Section 4.1 hereof, distribute each Trust as follows:

i l

2.1. Seoarate Trusts. The Company has established a separate Trust for each Plant. Each

)

i time the Company 'makes a contribution to the Trust Fund, it shall designate the amount of such contribution allocable to each such separate Trust. The Trustee shall maintain separate I

records for each Trust and shall credit thereto its pro rata share of all income of the Trust i

Fund and charge'thereto its pro rata share of all expenses (other than expenses attributable to a l

particular Plant which shall be expenses charged to the Trust named for such Plant) and any losses. The Trustee shall not be precluded from pooling the assets of the Trusts with one

. another for investment purposes, and may treat each Trust as having received or accrued a -

ratable portion of the Trust Fund income in any year.

2.2 Payment of Nuclear Decommissioning Costs. The Trustee shall make payments of Qualified Costs in accordance with the following procedures:

(a) Disbursements to Third Parties. The Trustee shall make payments of Qualified Costs to any person (other than the Company) for goods provided or labor or other services rendered to the Company in connection with the decommissioning of a Plant within five business days of the receipt of the Disbursement Certificate.

(b) Reimbursement to the Company. The Trustee shall make payments to the Company in reimbursement of Qualified Costs actually incurred by the Company and paid to any other person within five business days of receipt of a Withdrawal Certificate.

The Trustee shall be under no duty to inquire into the correctness or accuracy of matters contained in a Disbursement Certificate or Withdrawal Certificate unless representatives of the Trustee then approving any withdrawal or disbursement based on such certificate have actual knowledge of the falsity of any statements made herein.

2.3 Additions to Trusts. From time to time prior to the termination of each Trust held hereunder, the Company may make, and the Trustee shall accept, additional contributions of funds to any separate Trust held hereunder to satisfy the purpose of thi; Trust Agreement as set forth in Section 1.3 hereof. The making of a contribution by the Company shall constitute the certification of the Company that all necessary consents and approvals to such contribution have been obtained.

2.4 Subsequent Adjustments. The Trustee and the Company understand that the contributions made by the Company and allocated to a Trust from time to time may subsequently be determined to exceed the amounts determined pursuant to Section 468A of the Code and paragraph (c)(2)(ii) of Q1.468A-5T thereunder (any such excess being hereinafter referred to as an " Excess Contribution"). Upon the written certification of the Company setting forth the amount of the Excess Contribution, the Trustee shall distribute such amount to the Trustee of the MidAmerican Energy Company Tax Qualified Decommissioning Trust Fund created and existing pursuant to a trust agreement dated December 29,1995 between the Company and the Trustee named therein, or, if so requested in such written certification, transfer all or a portion of such amount to one or more other separate Tmsts held hereunder.

Any income attributable to any such Excess Contribution shall be allocated to the Trust to which such Excess Contribution relates.

2.5 Remittance of Taxes. The Trustee shall remit to the Company within 15 business days after the Company's request therefor the amount from each Trust which the Company c.rtifies as the amount by which the Company's federal and, if applicable, state income taxes (including estimated payments) for the preceding fiscal year were increased by the net income of such Trust. The Trustee shall be under no duty to inquire into the correctness or accuracy of any such certificate.

2.6 No Transferabilitv of Interest in any Trust. Except to the extent that any transfer of interest of the Company is approved where required by the ICC, IUB, NRC and FERC, the interest of the Company in any Trust is not transferable, whether voluntarily or involuntarily, by the Company nor subject to the claims of creditors of the Company; provided. however, that any creditor of the Company as to which a Disbursement Certificate for a Trust has been properly completed and submitted to the Trustee may assert a claim directly against such Trust in an amount not to exceed either the amount specified on such Disbursement Certificate or the amount of such Trust available to pay costs other.han amounts then owing the Trustee under Section 3.2 hereof.

2.7 Time of Termination. Each Trust hereunder shall terminate to the extent provided in this Section 2.7 upon the earlier to occur of the following events:

i (a) In whole, upon the substantial completion of the nuclear decommissioning of I

the Plant for which such Trust was created and named and as evidenced to the Trustee by the written certification of the Company.

(b) To the extent allowed or provided under the Illinois Statute, the Iowa Statute, the NRC Rule or any Future Order.

The Trust Fund shall terminate when all of the separate Tmsts have terminated.

2.8 Distribution of Trust Upon Termination. Upon termination of each Trust, the Trustee shall distribute the entire remaining amount of the trust, including all accrued, accumulated l

and undistributed net income, to the Company; provided. however, that no such distribution l

shall be made unless either (a) an order of the ICC, the IUB, the NRC and FERC specifically l

authorizing such distribution is in effect, as evidenced to the Trustee by the written l

certification of the Company, and which certification specifies further that all necessary consents and approvals to such distribution have been obtained, oi (b) the Company has furnished the Tmstee with an opinion of legal counsel to the effect that no such orders are L

necessary to authorize such distribution and that all necessary consents and approvals to such distribution have been obtained.-

2.9 Alterations and Amendments. The Trustee and the Company understand and agree I

that amendments may be required to this Agreement from time to time to effectuate the purpose of this Trust Agreement and to comply with amendments to or changes in the Illinois Statute, the Iowa Statute, the NRC Rule, any Future Orders, changes in tax laws (including Section 468A of the Code), regulations or rulings (whether published or private) of the Service, and any other changes in the laws applicable to the Company, the Plants or the Trusts created hereunder. The Company and the Trustee may amend this Agreement to the extent necessary or desirable to effectuate such purpose or to comply with such changes; provided.

however, in any event, the Trustee may decline to adopt such amendment, if such amendment increases the expenses or responsibilities of the Trustee and no provision satisfactory to the Trustee has been made to compensate the Trustee for such increase, or if the Trustee determines it would be unable with reasonable effort to comply with its duties as to be l

- amended.

L 2.10 No Authority to Conduct Business. The purpose of this Trust Agreement is limited to the matters set forth in Section 1.3 hereof. This Agreement shall not be construed to confer upon the Trustee any authority to conduct business.

ARTICLE III: GENERAL PROVISIONS RELATING TO THE TRUSTEE The appointment of any successor Trustee, provisions governing resignation and compensation of the Trustee and the general rules governing the relationships of the Trustee and the Company and any third parties are as follows:

3.1 Designation and Oualification of Successor Trustees. At any time during the term of this Agreement, the Company shall have the right to remove the Trustee acting hereunder and appoint another qualified entity as a successor trustee upon 30 days notice in writing to the l-l.

Trustee, or upon such shorter notice as may be acceptable to '.e Trustee. Any Tiustee shall have the right to resign at any time upon 30 days notice in writing to the Company and upon such resignation the Company shall appoint another qualified entity as a successor Trustee.

Notwithstanding the foregoing, no such removal or resignation iall be effective until a successor Trustee is appointed by the Company and, if necessary, approved by appropriate regulatory authorities, l

Any successor Trustee shall qualify by a duly acknowledged acceptance of this Agreement and the trusts created hereunder, delivered to the Company. Upon acceptance of such appointment by the successor Trustee, the Trustee shall transfer to such successor Trustee the i

Trust Fund. Any successor Trustee shall have all the rights, powers, duties and obligations herein granted to the original Trustee.

If for any reason the Company is unable to or does not, in the event of the resignation or removal of the Trustee as provided above, appoint a successor Trustee within 40 days after such resignation or removal, either the Company or the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee.

3.2 Compensation and ReimburseEtat. The Trustee shall be entitled to compensation from each Trust held hereunder at such rates as may be approved in writing from time to time by the Company. Subject to the approval of the Company (which shall not be unreasonably withheld or delayed), the Trustee shall be entitled to be reimbursed from each Trust held hereunder for out-of-pocket expenses including, but not limited to, expenses of agents, auditors and counsel, inenred in connection with the administration of such Trust.

3.3 Transactions With Third Parties. No person or organization dealing with the Tiustee hereunder shall be required to inquire into or to investigate its authority for entering into any transaction or to see to the application of the proceeds of any such transaction.

3.4 Financial Statements. The Trustee shall furnish monthly financial statements (audited with respect to accounting by the Trustee's internal audit staff) for each Trust to the Company not later than the 15th day of the following month, or at such other less frequent interval as the Company may require. The financial statements shall show the financial condition of the Trust including, without limitation, the market value of the assets, and the income and expenses of each Trust for the period since the preceding statement and such other information as may be reasonably requested by the Company. The financial statements shall be audited annually by independent certified public accountants employed by the Trustee, subject to the limitations contained in Section s.8 hereof. The Trustee shall furnish such financial statements as required by law or regulation to the Company.

3.5 Regulatory Reports. The Trustee shall furnish reports to the ICC in compliance with 220 ILCS 5/8-308.1(e.). The Trustee shall provide any such reports to the Company prior to filing with the ICC.

3.6 Lax Returns and Other Renorts. The Trustee shall prepare or cause to be prepared such income or other tax returns and such reports for the Trusts as may be required from time to time and shall provide copies thereof to the Company in advance of their filing for review e

1 by the Company. The Trustee shall provide to the Company all statements, documents, lists 4

or other information reasonably requested by the Company. The Trustee shall also sign all

- such returns and file them or cause them to be filed with the appropriate government agencies.

}

The Trustee shall cooperate with all requests made by regmatory agencies and shall provide copies to the Company in advance of all information submitted to regulatory agencies. At the Company's request, the Trustee shall testify with respect to the Trusts and the Trust Fund in proceedings before regulatory agencies.

I i

3.7 Nominees. Depositories. If the Trustee employs an a;ent 01 depository specifically for purposes of providing services related to any Trust held hereunder (other than a securities broker), the Trustee shall disclose to such agent or depository that it is employed on behalf of such Trust.

3.8 Future Orders. The Company shall promptly advise the Trustee in writing of the existence of any Future Order having the effect of imposing new or different responsibilities upon the Trustee under this Agreement.

3.9 Appointment ofInvestment Manager. The Company shall have the right from time to time to appoint and remove one or more investment managers for any Trust held hereunder and to direct the segregation of any part or all of any such Tmst into one or more accounts to be known as " investment manager accounts" and if it does so, it shall appoint an individual, partnership, association or corporation as investment manager to manage the portion of any Trust so segregated. Written notice of any such appointment and/or removal shall be given to the Trustee and the investment manager so appointed. The appointment shall be accomplished using an investment manager agreement signed by the Company and the investmem manager and acknowledged by the Trustee. As long as the investment manager is acting, the investment manager shall have full authority to direct the acquisition, retention and disposition of the assets from time to time comprising the investment manager account being managed by the investment manager, and except as set forth in the following paragraph, the Trustee shall have no duty or obligation to review the assets from time to time comprising such investment manager account, to make any recommendations with respect to the acquisition, retention and disposition thereof, nor to determine whether any direction from the investment manager is proper or within the terms of this Agreement.

The Trustee shall have no liability or responsibility to the Company or the Trusts for acting on the direction of, or for failure to r.ct in the absence of directions from, the investment manager for any investment maaager account. The Trustee may assume that any investment manager account previously established and the appointment of any investment manager for that account continues in force until receipt of written notice to the contrary from the Company. Pending receipt of directions from the investment manager, any cash received by the Trustee from time to time for any investment manager account shall be invested upon receipt in instruments maturing in three banking days or less. The Trustee shall review the assets in any such investment manager account immediately after their purchase only for the purpose of determining whether such assets are permissible investments under the guidelines

-established for such account and the provisions of Section 4.3 hereof, and the Trustee shall advise the investment manager of information it receives from an issuer or similar source regarding calls, redemptions, purchase offers and similar matters relating to assets held in any 1

1 1 i

Trust hereunder. The Company will indenmify the Trustee and hold it harmless from any liability or expense in connection with or arising out of (i) any action taken or omitted or any investment or disbursement of any part of the investment manager account made by the Trustee at the direction of the investment manager, or (ii) any action taken by the Trustee pursuant to notification of an order issued by an investment manager to purchase or sell securities direcdy to a broker or dealer under a power of attorney.

3.10 Certain Duties and Responsibilities of the Trustee.

(a) In the absence of bad faith on its part, the Trustee may conclusively rely upon certificates or opinions furnished by the Company to the Trustee pursuant to this Agreement.

(b) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct in carrying out its responsibilities under this Agreement, except that (i) this Subsection shall not be construed to limit the effect of Subsection (a) of this section and (ii) no provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

3.11 Certain Rights of Trustee. Except as otherwise provided in Section 3.9 hereof:

(a) Any request or direction of the Company mentioned herein shall be sufficiently evidenced by a written request or direction signed, prepared or furnished by an authorized representative of the Company or a verbal or telephonic reque" or order confirmed within a reasonable time by such a written request or directic md any action of the board of directors of the Company may be sufficiently e-

.cd by a certificate of the Company's secretary or assistant secretary; (b) Whenever in the administration of any Trust created under this Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon the I

certificate of an authorized representative of the Company; (c) Subject to 3.9(b) above, the Tmstee may consult with legal counsel and the written advice of such counsel or any opinion of such counsel shall be full and j

complete authorization and protection in respect of any action taken or omitted by it hereunder in reliance thereon; (d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of the Company pursuant to this Agreement, unless the Company shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; and 8-

- - - ~ - - -. -. -. - -. -... - - -.- _ - -

1 i

i (e) In the event that The Northern Trust Company incurs any liability, loss, claim, l

suit or expense (including reasonable attorneys fees) arising directly out of its provision j

of services under tnis Agreement, or its status as Trustee hereunder, under circumstances where The Northern Trust Company cannot obtain or would be j.

precluded by law from obtaining payment or reimbursement of such liability, loss, j

claim, suit or expense (including reasonable attornevs fees) from the Trust Fund, then j

the Company (which has the authority to do so under the laws of the state of its 1

l incorporation) shall indemnify and hold The Northern Trust Company harmless from

)

l and against such liability, loss, claim, suit or expense, except to the extent such i

liability, loss, claim, suit or expense arises directly from a breach or negligence in _

j performance by the Trustee of its responsibilities as created under the terms of this I

Agreement. This paragraph shall survive the termination of this Agreement.

i l

ARTICLE IV: TRUSTEE'S POWERS The Trustee shall have, with respect to each Trust held hereunder, the following powers, l

all of which powers are fiduciary powers to be exercised in a fiduciary capacity and in the best interests of each Trust, and which are to be exercised as the Trustee, acting in such fiduciary capacity, in its discretion, shall determine, except that the Trustee shall not act in its discretion but only at the direction of an appointed investment manager in the exercise of those powers given in Section 4.2,4.3,4.4 and 4.5 hereof with respect to the acquisition, retention and disposition of the assets of an investment manager account, and, except as otherwise provided, which are intended in no way to limit the general powers of the office, namely:

4.1 Payment or Provision for Excenses of Administration. To incur, pay or make provision for any and all charges, taxes and expenses upon or connected with each Trust held hereunder in the discharge of its fiduciary obligations under this Agreement, but to charge said amounts to such Trust only to the extent that such amounts are directed to be paid from such Trust by the Company or may be incurred and paid from such Trust.

4.2 Prudent Investments. Subject to the limitations provided in Section 4.3 hereof, to invest the assets of each Trust only in assets that are prudent investments for assets held in trust and in such a way as to attempt to maximize the after-tax returns thereon.

4.3 -Investment of Trust Fund. Pending use of any Trust held hereunder for the purpose -

)

of this Trust, to invest and reinvest all or any part of such Trust, including any undistributed income therefrom; provided. however, that no such investment or reinvestment may be made j

by the Trustee:

(a) In any security or asset of any operator of a nuclear power plant; or (b) Which would contravene the Illinois Statute, the Iowa Statute or any Future Order in effect at the time such investment or reinvestment is made and previously furnished to the Trustee with reference to the Trusts.

~ Any investment or reinvestment made by an investment manager shall be reviewed by the Trustee for compliance with (a) or (b) above as provided in Section 3.8 hereof.

9 E

All investments must be sufficiently liquid to enable cach Trust to fulfill the purpose of this Agreement and to satisfy obligations as they become due as communicated in writing to the Trustee. Nothing in this Section 4.3 shall be construed as requiring the Trustee to make any investigation as to when any of the Plants may be decommissioned or when obligations relating to such decommissioning may be expected to become due, and absent a written communication from the Company, the Trustee shall invest each separate Trust as though such Trust had no short or intermediate term cash requirements.

4.4 Management of Trusts. To sell, exchange or otherwise dispose of all or any part of any Trust held hereunder, without prior application to or approval by or order of any court, upon such terms and in such manner and at such prices as the Trustee shall determine; to modify, renev or extend mortgages, bonds, notes or other obligations or any installment of principal thereof or any interest due thereon and to waive any defaults in the performance of the terms and conditions thereof; and to execute and deliver any and all assignments, bonds or other instruments in connection with these powers, at such times, in such manner and upon such terms and conditions as the Trustee may deem expedient. The Trustee's determinations of manner of sales, terms, prices and the exercise of other powers granted herein, if reasonably made, are not to be questioned.

Notwithstanding anything contained in this Agreement to the contrary, the Trustee in exercising its discretionary authority hereunder may not authorize or carry out any sale, exchange or other transaction between any Trust and a " disqualified person" within the meaning of Section 4951 of the Code except the payment of compensation and expenses pursuant to Section 3.2 hereof or unless such transaction is not an act of "self-dealing" within the meaning of Section 4951 of the Code, as such section is made applicable to each Trust by the Illinois Statute. The Trustee, in exercising its discretionary authority hereunder, shall not cause any Trust to engage in any act of self-dealing with the Company or any affiliate of the Company. The Company agrees to furnish the Trustee with the identity of all persons who are

" disqualified persons" within the meaning of said Section 4951 of the Code by reason of their affiliation with the Company.

4.5 Extension of Obligations and Negotiation of Claims. Subject to the limitations contained in Section 4.3 and 4.4 hereof, to renew or extend the time of payment of any obligation, secured or unsecured, payable to or by any Trust, for as long a period or periods of time and on such terms as it shall determine; and to adjust, settle, compromise and arbitrate claims or demands in favor of or against any Trust, including claims for taxes, upon such terms as it deems advisable.

4.6 Registration of Securities. To hold any stocks, bonds, securities and/or other property in the name of a nominee, in a street name or by other title-holding device, without indication of trust.

4.7 Location of Assets. To keep any property belonging to any Trust at any place in the United States.

4.8 Retention and Removal of Professional Service Providers. To employ attorneys, accountants and custodians as it shall deem advisable and to make such payments thereof as the Trustee shall deem reasonable for the implementation of the purpose of this Agreencnt. The Trustee shall have the absolute right to dismiss any such agents for any reason whatsoever; provided that the Trustee's selection of an accounting firm shall be subject to the prior consent of the Company, which consent shall not be unreasonably withheld.

i 4.9 Delegation of Ministerial Powers. To delegate to other persons such ministerial powers and duties as it may deem to be advisable.

4.10 Discretion in Exercise of Powers. To do any and all other acts which the Trustee i

shall deem proper to effectuate the powers specifically conferred upon it by this Agreement; provided. however, that this section shall not authorize the Trustee to do any act or participate

)

in any transaction which would (a) contravene any provision of this Agreement; or (b) violate the terms and conditions of, or cause any Trust hela hereunder not to satisfy the requirements

~

of, the Illinois Statute, the Iowa Statute, the NRC Rule, any Future Order or any other j

applicable law, regulation or ruling.

ARTICLE V: MISCELLANEOUS PROVISIONS 5.1 Headings. The section headings set forth in this Agreement are inserted for convenience of reference only and shall be disregarded in the construction or interpretation of any of the provisions of this Agreement.

5.2 Particular Words. Ary word contained in the text of this Agreement shall be read as the singular or plural as may be applicable in the particular context. Unless otherwise specifically stated, the word " person" shall be taken to mean and include an individual, partnership, association, trust, company or corporation.

5.3 Severability of Provisions. If any provision of this Agreement or its application to any person or entity or in any circumstances shall be invalid and unenforceable, the application of such provision to persons and in circumstances other than those as to which it is invalid or unenforceable and the other provisions of this Agreement, shall not be affected by such invalidity or unenforceability.

5.4 Form and Content of Communications. The names of persons authorized to act on behalf of the Company shall be certified, with the specimen signature of any such person, to the Trustee by the Company. Until notified in writing to the contrary, the Trustee shall have the right to assume that there has been no change in the identity or authority of any person previously certified to it hereunder.

5.5 Delivery of Notices Under Agreement. Any notice required by this Agreement to be given to the Company or the Trustee shall be deemed to have been properly given when mailed postage prepaid, by registered or certified mail. Notices to the Company shall be addressed to:

MidAmerican Energy Company 666 Grand Avenue, P. O. Box 657 Des Moines, Iowa 50306 Attention: Group Vice President Finance and Accounting I

l Notices to the Trustee shall be addressed to:

l The Northern Trust Company 50 South LaSalle Street Chicago, Illinois 60675 Attention: Vice President-Master Trust and Custody Services 5.6 Successors and Assigns. Subject to the provisions of Sections 2.6 and 3.1 le.sf, this Agreement shall be binding upon and inure to the benefit of the Company, the Trustee and their respective successors and assigns.

5.7 Counternarts of Agreement. This Agreement has been executed in counterparts, each of which shall be deemed to be an executed original.

i 5.8 Governing Jurisdiction. The Trusts created hereunder are Illinois trusts and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of the State ofIllinois.

5.9 Miscellaneous. The Trusts shall operate on an accounting year which coincides with i

the calendar year.

1 IN WITNESS WHEREOF, the Company and the Trustee have as of the day and year first above written, executed and delivered this Agreement.

i MidAmerican Energy Company i

By Attest:

/m Northern Trust Company

/

By /

A Af VICZ PRESIDI.NT Attest: I.</m' 2.,M r

/

EXAMINED AS TO r RM j

n EXHIBIT A r

DISBURSEMENT CERTIFICATE i

l The undersigned, being a duly authorized officer of MidAmerican Energy Company, an L

Iowa corporation (the " Company"), and in such capacity being duly authorized and J-empowered to execute and deliver this certificate, hereby certifies to the Trustee of the

' MidAmerican Energy Company Non-Tax Qualified Decommissioning Trust Fund (the

" Trust"), pursuant to Section 2.2(a) of that certain Trust Agreement dated December 29,1995 l

-(the " Agreement") between the Company and the Trustee, as follows:

(1) There is due and owing to each Payee (" Payees") [all/a portion of] the invoiced cost to the Company for goods or services provided in connection with the decommissioning of the [name of Plant] as evidenced by the Invoice Schedule (with supporting exhibits) attached as Exhibit I hereto; (2) All such amounts due and owing to such Payees constitute Qualified Costs; (3) Ali conditions precedent to the making of this disbursement set forth in any agreement between each such Payee and the Company have been fulfilled; (4) No Payee is a " disqualified person" within the meaning of Section 4951 of the i

Code by reason of an affiliation with the Company or, if any are, then the payment constitutes compensation or payment or reimbursement of expenses which are reasonable and necessary to carry out the purpose of the Trust and the payment is not excessive; and (5)- The payment of the amounts owing meets the requirements of the Illinois i

Statute, the Iowa Statute and any Future Orders and all necessary consents and approvals for such payment have been obtained.

1 Accordingly, you are directed to' permit the disbursement of $

from the Trust in order to permit payment of such sum to be made to the aforementioned Payees for such purpose. You are further directed to disburse such sum, once withdrawn, directly to such

-Payees in the following manner: [ describe manner of payment] on or before [date].

Although you are under no obligation to make any further inquiry or investigation or to obtain any further documentation, it is understood that you may, in your discretion, elect to withhold any such disbursement to any Payee unless and until you receive written releases, in form satisfactory to you, of any liens, security interests or claims of such Payee against the l_

Company or its property as you may in your discretion require.

l. - - _.

)

i Capitalized terms used herein without d::finition shall have the meanings given to such

~

terms in the Agreement, WITNESS my hand this day of

, 19_.

)

i By:

1 Duly Authorized OfDcer 9

i 6

4 1

i

4...

- -. - - - ~. _.

EXHIBIT B WITHDRAWAL CERTIFICATE The undersigned, being a duly authorized officer of MidAmerican Energy Company, an j

Iowa corporation (the " Company"), and in such capacity being duly authorized and empowered to execute and deliver this certificate, hereby certifies to the Tmstee of the MidAmerican Energy Company Non-Tax Qualified Decommissioning Trust Fund (the

" Trust"), pursuant to Section 2.2(b) of that certain Trust Agreement dated December 29,1995 (the " Agreement") between the Company and the Trustee, as follows:

(1) The Company has paid and is entitled to reimbursement for amounts paid to

. Payees for goods or services provided in connection with the decommissioning of the.

'[name of Plant] as described in the Schedule (with supporting exhibits) attached as Exhibit I hereto; (2) All such amounts paid to such Payees constitute Qualified Costs; (3) No Payee was a " disqualified person" within the meaning of Section 4951 of the Code by reason of an affiliation with the Company or, if any were, then the payment constituted compensation or payment or reimbursement of expenses which were reasonable and necessary to carry out the purpose of the Trust and the payment was not excessive; and (4) The payment of the amounts met the requirements of the Illinois Statute, the Iowa Statute and any Future Orders and all necessary consents and approvals for such payment has been obtained.

Accordingly, you are directed to permit the disbursement of $

from the Trust in order to reimburse the Company for such payments. You are further directed to disburse ~such sum, once withdrawn, directly to "MidAmerican Energy Company" on or before [date].

Capitalized terms used herein without definition shall have the meanings given to such terms in the Agreement.

WITNESS my hand this day of

, 19 By:

Duly Authorized Officer

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Unit 2 TAX QUALIFIED TRUST AGREEMENT l

THIS TRUST AGREEMENT (" Agreement") is made this 29th day of December,1995 between MidAmerican Energy Company, an Iowa corporation (the " Company"), and The 4

Northern Tmst Company, an Illinois corporat. ion, having trust powers (hereinafter, together with any successors in office, called the " Trustee").

WHEREAS, the Company is the owner in whole or in part of each of the Plants (as hereinafter defined);

^

WHEREAS, the Company is subject to regulation by the Illinois Commerce Commission

("ICC"), the Iowa Utility Board ("IUB"), the Nuclear Regulatory Commission ("NRC") and the Federal Energy Regulatory Commission ("FERC");

WHEREAS, under the Code (as hereinafter defined), including Section 468A thereof, certain inconte tax benefits are available to the Company by funding qualified " nuclear decommissioning reserve funds;" and WHEREAS, this Agreement is entered into and intended to be and remain qualified under Section 468A of the Code and the regulations promulgated thereunder, and any successor or amendments thereto; and WHEREAS, the Company previously established, pursuant to the Illinois Statute, Iowa Statute and Future Orders, a tax qualified trust ("Tmst") for each Plant (as hereinafter defined) pursuant to a trust agreement dated as of March 15,1989 between the Company and Harris Trust & Savings Bank (" Harris"); and WHEREAS, the Company wishes to substitute the Trustee for Harris, and the Trustee is agreeable to such substitution, and in so doing, the parties wish to continue the existence and administration of the Trusts pursuant to this Agreement; and WHEREAS, the Company has established, pursuant to the Illinois Statute, Iowa Statute and Future Orders, a non-tax qualified trust for each Plant (as defined herein) pursuant to a trust agreement dated as of March 15,1989 between the Company and Harris; and WHEREAS, the Company has substituted Trustee for Harris, and the Trustee has agreed to such substitution, with respect to the non-tax qualified trusts pursuant to the trust agreement dated December 29,1995 between the Company and Trustee; NOW, THEREFORE, the Company shall deliver to the Trustee and, upon receipt, the Trustee shall acknowledge receipt of the funds described on Schedules 1 through 5, inclusive, representing the assets of the Trusts (as hereinafter defined);

TO HAVE AND TO HOLD, such Trusts and such additional funds as may from time to time be added thereto as provided herein, together with the proceeds and reinvestments thereof (hereinafter collectively called the " Trust Fund") unto the Trustee; IN TRUST NEVERTHELESS, for the use and purpose and upon the terms and conditions hereinafter set forth; ARTICLE I: DEFINITIONS. NAME AND PURPOSES 1.1. Definitions. As used in this Agreement, the following terms shall have the following meanings.

" Agreement," " Trust Agreement" and the terms " hereof," "herein," " hereto" and

" hereunder," when used in this Agreement, shall mean and include this Agreement as the same may from time to time be amended, modified or supplemented.