Warren Buffett urges states to shield utilities from large wildfire claims

By Corbin Hiar | 05/06/2024 06:19 AM EDT

“We’re not going to throw good money after bad,” the Berkshire Hathaway CEO said, as subsidiary PacifiCorp faces $8 billion in lawsuits.

Shareholder Tina Schmidt of Cozad, Nebraska, wears a shirt with Warren Buffett's portrait in the style of an Andy Warhol painting at he Berkshire Hathaway annual meeting Saturday in Omaha, Nebraska.

Shareholder Tina Schmidt of Cozad, Nebraska, wears a shirt with Warren Buffett's portrait in the style of an Andy Warhol painting at the Berkshire Hathaway annual meeting Saturday in Omaha, Nebraska. Rebecca S. Gratz/AP

Warren Buffett suggested Saturday that Berkshire Hathaway might sell off some of its electric utilities unless more Western states limit power providers’ wildfire-related liabilities.

“There’s going to be enormous amounts of money — enormous amounts of money — spent on power” in the coming years, Buffett, 93, said at his company’s annual meeting. “And if you’re going to do it with private owners, there’s nobody better situated than Berkshire to satisfy a large portion of the needs of the country.”

“But we’re not going to throw good money after bad,” the Berkshire Hathaway CEO said, alluding to the $8 billion in claims Berkshire expects to face for the role its utility PacifiCorp allegedly played in sparking recent wildfires in Oregon and California. The utility — which also serves Washington state customers — is battling a growing wave of legal challenges after its power lines were implicated in multiple blazes.

Advertisement

Buffett’s handpicked successor, Greg Abel, added that the conglomerate needs “both legislative and regulatory reform across the PacifiCorp states if we’re going to deploy incremental capital [and] make incremental contributions into that business.” Abel helps oversee all of Berkshire aside from its lucrative insurance businesses.

An example of the sort of policy changes Berkshire is seeking, Abel said, is a new Utah law that caps the amount of money a utility can be sued for pain or suffering caused by a wildfire to $450,000 per person.

The company is also preparing for a surge in electricity demand from AI and data centers. Abel said Berkshire expects energy consumption to double in Iowa by the mid-2030s. In Nevada, he said, Berkshire’s two utilities predict demand will triple by 2040.

Meeting that demand growth will require raising billions of dollars from ratepayers and “alignment with the state and their policies,” he said. Abel also defended Berkshire’s plan to build new natural gas plants, arguing that the company couldn’t meet growing demand with only intermittent renewable energy and utility-scale batteries.

The daylong shareholder meeting in Omaha, Nebraska, drew thousands of attendees from as far away as China, Germany and Malaysia. It was the first since the passing of former Vice Chair Charlie Munger, who in recent years had questioned the likelihood of catastrophic climate change.

The company did not announce the outcome of votes on two climate-related shareholder resolutions. But Buffett, who controls 30 percent of Berkshire’s voting power, likely had enough sway to defeat them.

Most shareholder questions Saturday sought information on specific business units or life advice from Buffett, the so-called Oracle of Omaha.

But Buffett briefly veered into politics when he explained why Berkshire had sold billions of dollars worth of Apple stock last quarter.

The company paid 21 percent on the substantial gains it had made from the stock — a percentage he said would increase if the Trump-era tax cuts for corporations aren’t extended next year.

“With the present fiscal policies, I think something has to give. I think that higher taxes are quite likely,” Buffett said, indicating he believes President Joe Biden will retain the White House in November.

Nebraska could play a pivotal role in the 2024 presidential election, with Biden needing the electoral vote from the Omaha-based swing district to win if he prevails in only three Midwest battleground states.

“If the government wants to take a greater share of your income, or mine, or Berkshire’s, they can do it,” Buffett said Saturday. “We always hope at Berkshire to pay substantial federal income taxes.”