Berkshire Hathaway Energy
Company Overview
Berkshire Hathaway Energy (BHE) is one of the largest energy infrastructure companies in North America, owning regulated electric and gas utilities, natural gas transmission pipelines, and residential real estate operations. Originally known as MidAmerican Energy, it was renamed in 2014. Greg Abel, Berkshire's designated successor as CEO, built BHE into its current scale across 30+ years.
Investment Story
1999: MidAmerican Energy investment. Berkshire invested $3.5 billion for approximately 76% of MidAmerican Energy Holdings, then primarily an Iowa electric utility. The stable, regulated cash flows and the opportunity to deploy large capital at authorized returns were the primary attraction.
2006: PacifiCorp acquisition. MidAmerican's $9.4 billion acquisition of PacifiCorp doubled its utility footprint, serving 2 million customers across Oregon, Wyoming, Utah, and neighboring western states.
Natural gas pipelines. During the 2000s, MidAmerican acquired the Kern River and Northern Natural Gas pipeline systems — thousands of miles of fee-based transmission infrastructure providing revenues independent of commodity prices.
Renewable energy leadership. Under Greg Abel's leadership, BHE became one of the largest operators of wind generating capacity in the U.S., investing $30+ billion in renewable energy — positioning it ahead of regulatory and consumer trends.
2023: Wildfire liability. Berkshire Hathaway Energy's utilities in Hawaii and western states faced significant wildfire litigation exposure, acknowledging that wildfire risk had grown into a material financial threat for regulated utilities in fire-prone regions.
Buffett's Own Words
*Jordan’s Furniture and contracting to buy a major portion of MidAmerican Energy. We will talk more about these companies later in the report but let me emphasize one point here: We bought both for cash, issuing no Berkshire shares. Deals of that kind aren’t always possible, but that is the method of acquisition that Charlie and I vastly prefer. Guides to Intrinsic Value I often talk in these pages about intrinsic value, a key, though far from precise, measurement we utilize in our acquisitions of businesses and *
*Jordan’s Furniture and contracting to buy a major portion of MidAmerican Energy. We will talk more about these companies later in the report but let me emphasize one point here: We bought both for cash, issuing no Berkshire shares. Deals of that kind aren’t always possible, but that is the method of acquisition that Charlie and I vastly prefer. Guides to Intrinsic Value I often talk in these pages about intrinsic value, a key, though far from precise, measurement we utilize in our acquisitions of businesses and *
I described the first purchase — 76% of MidAmerican Energy — in last year’s report. Because of regulatory constraints on our voting privileges, we perform only a “one-line” consolidation of MidAmerican’s earnings and equity in our financial statements. If we instead fully consolidated the company’s figures, our revenues in 2000 would have been $5 billion greater than we reported, though net income would remain the same. • On November 23, 1999, I received a one-page fax from Bruce Cort that appended a Washington P
Flight Services........................................................... MidAmerican Energy (76% owned) ......................... Retail Operations....................................................... Scott Fetzer (excluding finance operation) ............... Shaw Industries(2)...................................................... -- -- Other Businesses....................................................... Purchase-Accounting Adjustments ........................... (726) (881) (699) (843) Corporate Interest Ex
*Berkshire also made some important acquisitions last year through MidAmerican Energy Holdings (MEHC), a company in which our equity interest is 80.2%. Because the Public Utility Holding Company Act (PUHCA) limits us to 9.9% voting control, however, we are unable to fully consolidate MEHC’s financial statements. Despite the voting-control limitation – and the somewhat strange capital structure at MEHC it has engendered – the company is a key part of Berkshire. Already it has $18 billion of assets and delivers our *
Investment Lessons
Regulated utilities deploy unlimited capital at predictable returns. Regulators allow utilities to earn approximately 10-11% on equity invested in infrastructure — and the investment opportunities are essentially unlimited (grid upgrades, renewable capacity, transmission). For Berkshire, whose cash generation exceeds its acquisition capacity in most years, BHE provides a perpetual engine that converts cash into regulated equity investments at adequate returns.
Renewable energy investment is a long-term strategic position. BHE's early aggressive investment in wind and solar created operational expertise and asset scale that positions it advantageously as the global energy system evolves. First-mover advantages in renewable permitting, land agreements, and grid interconnection are particularly sticky competitive advantages in utilities.