Buffett gets spark from utilities
Warren Buffett’s conglomerate may be best-known for its insurance companies and the Oracle of Omaha’s own investments, but utilities have played a growing role in Berkshire Hathaway’s success over the last 17 years.
Berkshire Hathaway’s profits from power generation and distribution will grow even further if it wins its $9 billion bid to buy Texas power transmitter Oncor Electric Delivery Co. That deal, announced last week, must first be approved by regulators and a bankruptcy court.
Berkshire got into the utility business in 2000 when it bought MidAmerican Energy, earning $109 million from the utility that year.
Today Berkshire owns PacifiCorp, Northern Natural Gas and NV Energy in the U.S., AltaLink in Canada, a large portfolio of wind and solar power projects and several other utility firms.
The utilities’ returns might not be spectacular because the amount they charge is tightly regulated, but they generate reliable profits even under terrible economic conditions.
Last year, Berkshire’s utilities generated $2.29 billion in profit for the Omaha, Nebraska based company. That represented more than 9 percent of Berkshire’s $24.1 billion net income in 2016.