Berkshire Hathaway, the conglomerate led by Warren Buffett, is gearing up to fight all lawsuits brought against its utility business, PacifiCorp, in relation to wildfires. Greg Abel, the future Berkshire chief executive, stated at the annual shareholder meeting that all litigation will be challenged as the cases are deemed “unfounded.”
The utility business has been under scrutiny after facing $30 billion in new claims from one thousand victims blaming PacifiCorp for causing Oregon wildfires in 2020. This comes on top of the $825 million already paid or owed in claims due to other wildfire-related lawsuits.
Buffett acknowledged that the utility business has been a challenge for Berkshire’s earnings, calling his failure to anticipate adverse developments in the sector a “costly mistake.” Abel highlighted the need for a cultural shift within the company to prioritize safety measures such as temporarily shutting off power during storms or wildfires.
Utah lawmakers recently allowed large utilities to collect surcharges from customers to establish wildfire funds and capped liability on some claims, a move Abel described as the “gold standard.” Berkshire has already started implementing changes, including updating systems for quick power shutdowns during wildfires and continuing to invest in reducing wildfire risks.
Despite these efforts, Abel emphasized the importance of being “very disciplined” about additional investments in utilities, echoing Buffett’s sentiment of not wanting to waste capital. Berkshire is committed to defending against the lawsuits and improving safety measures to prevent future wildfire incidents.