Berkshire Hathaway Sells Washington State Power Assets for $1.9 Billion
Berkshire Hathaway took the unusual step of divesting a portion of its utility business, agreeing to sell nearly $2 billion worth of power assets in Washington state. The move comes as the company faces substantial financial fallout from wildfires in the western United States.
PacifiCorp, a Berkshire Hathaway subsidiary, announced on Tuesday it had reached an agreement to sell wind farms, electrical transmission lines, and a natural gas plant to Portland General Electric (PGE) for $1.9 billion. Executives at PacifiCorp stated the sale would help stabilize the broader unit’s finances.
The sale marks a departure for Berkshire, known for its long-term investment strategy. Warren Buffett, Berkshire’s chairman, previously warned in his annual letter to shareholders in 2022 that the company would “not knowingly throw good money after bad” as litigation related to wildfires in Oregon and California progressed.
Buffett’s letter acknowledged the uncertainty surrounding the ultimate cost of wildfire-related losses, stating, “It will be many years until we know the final tally from [Berkshire Hathaway Energy’s] forest fire losses and can intelligently make decisions about the desirability of future investments in vulnerable western states.”
The divestiture occurs early in the tenure of Greg Abel, who became chief executive of Berkshire Hathaway at the start of 2024. Abel previously rose through the ranks of Berkshire’s energy business and played a key role in the company’s dealmaking within the sector. Investors will be closely watching to see if Abel adopts a different approach than his predecessor.
Buffett and his former business partner, Charlie Munger, were historically “very reluctant to sell sub-par businesses as long as we expect them to generate at least some cash,” according to a 1996 owner’s manual circulated to shareholders.
Berkshire is also reportedly considering offloading its stake in Kraft Heinz, following the packaged food company’s decision to split into two businesses – a move Buffett had previously opposed.
Berkshire Hathaway Energy and its PacifiCorp unit have faced intense scrutiny following wildfires in 2020 and 2022, which burned hundreds of thousands of acres and resulted in multiple fatalities. The company has been accused of failing to de-energize power lines during storm events.
Regulatory disclosures reveal that PacifiCorp had paid $1.4 billion in wildfire settlement costs as of last September, with estimated probable losses related to the catastrophes totaling $2.9 billion. The company has stated that its liquidity has been “materially impacted by the wildfires.”
PacifiCorp cited “diverging” policies among the six states it serves as a factor in its decision to sell the Washington assets. In a statement, the company explained that “these challenges have impacted the company’s financial stability, liquidity and credit ratings.”
The company added, “The sale will be a critical step in strengthening PacifiCorp’s financial position and simplifying operations across its service area.”
PacifiCorp will retain its hydroelectric power plant in Washington, which has a generating capacity of 578 megawatts.
Portland General Electric anticipates acquiring 140,000 customers, representing an annual rate base of $1.4 billion. PGE stated that certain liabilities, including those “associated with wildfires outside of Washington,” were excluded from the transaction.
