Buf­fett gets spark from util­i­ties

Northwest Arkansas Democrat-Gazette - - ONLINE EXTRA -

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.

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