Valued energy company encounters turmoil

Berkshire Hathaway Energy Faces Uncertain Future Amid Climate Change Challenges

When Berkshire Hathaway announced the acquisition of MidAmerican Energy in 1999, Warren Buffett hailed the Iowa gas and electric utility as squarely in the conglomerate’s “sweet spot”. Unheralded at the time, the $2bn transaction catapulted Buffett into the energy business, kicking off a quarter of a century of dealmaking that has transformed Berkshire into a major player, operating across 28 states, transporting 15 per cent of America’s natural gas, and serving 13 million customers.

However, with global warming bringing epochal change, the threats confronting Berkshire are multipronged. From potential damages from wildfires to criticism over the retirement of coal-fired power stations, the energy division faces fundamental upheaval. The future of the utilities business, which generated $2.3bn in operating earnings for Berkshire in 2023, is now in question.

Greg Abel, the man Buffett has picked as his successor, will have to navigate these challenges. The recent Oregon jury ruling against PacifiCorp, a Berkshire-owned utility, for causing deadly wildfires has raised concerns about the financial risks tied to climate change.

As Berkshire faces pressure from shareholders to disclose more about its climate change risks, the decisions Abel will face over the future of the business are likely to grow more complex. The company’s recent investments in natural gas infrastructure amid a shifting energy landscape highlight the challenges ahead.

With the energy transition accelerating and climate change impacts becoming more pronounced, Berkshire Hathaway Energy’s future hangs in the balance as it navigates a rapidly changing industry landscape.