Berkshire Hathaway Energy

[John Hjorth]

That would be a "negative price" per year of [uSD 19,000,000 minus USD 99,000 [give or take, perhaps he would be "inheriting" Mr. Buffetts security cost refunds]] = USD 18,901,000 per year, to fill Mr. Buffett's shoes, ref. the 2020 proxy.

 

That got to be some damn good shoes! -Imagine if Mr. Abel's shoe size is bigger than Mr. Buffett's!

[TREVNI]

That would be a "negative price" per year of [uSD 19,000,000 minus USD 99,000 [give or take, perhaps he would be "inheriting" Mr. Buffetts security cost refunds]] = USD 18,901,000 per year, to fill Mr. Buffett's shoes, ref. the 2020 proxy.

 

That got to be some damn good shoes! -Imagine if Mr. Abel's shoe size is bigger than Mr. Buffett's!

 

I would venture that the $19m per year has almost no marginal utility for Greg. Nor for Jain for that matter.

[bizaro86]

That would be a "negative price" per year of [uSD 19,000,000 minus USD 99,000 [give or take, perhaps he would be "inheriting" Mr. Buffetts security cost refunds]] = USD 18,901,000 per year, to fill Mr. Buffett's shoes, ref. the 2020 proxy.

 

That got to be some damn good shoes! -Imagine if Mr. Abel's shoe size is bigger than Mr. Buffett's!

 

I would venture that the $19m per year has almost no marginal utility for Greg. Nor for Jain for that matter.

 

It's relatively rare that people give up their compensation, even when it has little or no marginal utility for them.

 

For WEB, taking a very low salary probably saved the firm enough on compensation for the employees (and especially subsidiary CEOs) that at his ownership share he comes out ahead. That won't be the case for the successor, and I'd expect the pay package to reflect that reality.

[John Hjorth]

That would be a "negative price" per year of [uSD 19,000,000 minus USD 99,000 [give or take, perhaps he would be "inheriting" Mr. Buffetts security cost refunds]] = USD 18,901,000 per year, to fill Mr. Buffett's shoes, ref. the 2020 proxy.

 

That got to be some damn good shoes! -Imagine if Mr. Abel's shoe size is bigger than Mr. Buffett's!

 

I would venture that the $19m per year has almost no marginal utility for Greg. Nor for Jain for that matter.

 

It's relatively rare that people give up their compensation, even when it has little or no marginal utility for them.

 

For WEB, taking a very low salary probably saved the firm enough on compensation for the employees (and especially subsidiary CEOs) that at his ownership share he comes out ahead. That won't be the case for the successor, and I'd expect the pay package to reflect that reality.

 

Please slap a capitalization factor - perhaps based on life expectancy - on yearly USD 18,901,000 after tax [, perhaps also adjusted for inflation, ref. Mr. Buffett's salary].

 

None of us here on CoBF got to where we are today by not counting the coins, with the aim to get the notes.

[DooDiligence]

In a decade defined by the nation's need to invest in infrastructure, Berkshire Hathaway is uniquely positioned to help.

 

www.bloomberg.com/opinion/articles/2021-03-03/warren-buffett-s-berkshire-hathaway-is-just-what-the-u-s-needs-now

 

---

 

Greg Abel makes a cameo appearance to speak about BHE in 2019.

 

[longlake95]

Bill Gates always looks like his mind is in overdrive...man he is switched on. The best part is that he is putting that brain power towards the betterment of humanity.

[ValueMaven]

Remarkable.  I forgot about that back and forth on BHE back from 2019. 

[Cigarbutt]

There are only a handful of supra-regional projects going right now in North America for electricity infrastructure and one of them is the connection theme developed by PacifiCorp in the western part of USA. With the developing distributed energy aspect and with the integration of variable energy producing sources, counter-intuitively, there is a greater need for regional and supra-regional connections.

One of the other similar projects i've been following is a connection between my province north of the US border to Massachusetts. The plan is to meet the new challenges with modern transmission infrastructure and will involve export of excess energy from hydro-electricity to Massachusetts. The project has entered the construction phase. The aspects that characterize these projects are: operational complexity, very long-term perspective, ability to coordinate a vast and complex array of interest groups with conflicting objectives and very deep pockets, all attributes of BHE.

In the 'regulatory' 4-page letter, the word 'transmission' appears 57 times and is a typical example of BHE's ability to navigate complex regulatory hurdles.

https://www.energy.gov/sites/prod/files/2020/11/f81/BHE%20FINAL%20letter%20to%20DOE%20re%202020%20Congestion%20Study.pdf

In the letter, there is a reference to a 'congestion' report which shows, on page 8, the tremendous potential for investments in the "WECC".

https://www.energy.gov/sites/prod/files/2020/10/f79/2020%20Congestion%20Study%20FINAL%2022Sept2020.pdf

BHE's message: We're here to help.

[gfp]

This article describes a recent trip Greg Abel and BHE CEO William Fehrman made to the Klamath River where their boat was stopped by a blockade of activists across the river.  Sounds like everyone handled it well enough despite some tense moments.

 

https://kymkemp.com/2021/03/04/fight-of-the-river-people-the-generational-push-that-brought-berkshire-hathaway-to-the-table-and-put-dam-removal-back-on-track/

[gfp]

A little behind the scenes on what Berkshire Hathaway Energy executives are proposing in Austin in the wake of the Texas ERCOT debacle:

 

From the Dallas Morning News (paywall protected), summarized also by Forbes recently

https://www.forbes.com/sites/nicholasreimann/2021/03/25/berkshire-hathaway-reportedly-offers-over-8-billion-for-texas-emergency-power-supply/?sh=3f78588c589a

------------

Text of Dallas article:

 

Berkshire Hathaway Energy, part of Warren Buffett’s giant holding company, is proposing a fix for the Texas electric grid, which suffered widespread outages after a brutal storm last month.

But the plan includes a major change to Texas’ deregulated power market, including guaranteed payments for the extra capacity.

 

The company, to be known as Texas Reliability Corp., is offering to invest $8.3 billion in new generation powered by natural gas, along with gas storage. That would add about 10,000 megawatts of reliability plants to ERCOT, the grid that sends electricity to about 90% of Texans, the company said in a slide deck presentation.

In an event such as last month’s outages, the Berkshire plants would supply at least half the load that was shed from the system, a slide said.

Berkshire executives are in Austin this week to lobby lawmakers on the plan.

In its slides, Berkshire said the investment would protect ERCOT from future extreme weather events and would limit power outages to three-hour intervals. During last month’s weather crisis, some people were without electricity for several days.

But the proposal is likely to face opposition, especially from heavy industrial users of electricity. In general, they want to pay for power they use, not power pledged for emergencies.

Texas generators also would want to get in on the action, and one observer called the Berkshire proposal “a one-company capacity market.”

Berkshire proposes that consumers pay a fixed fee to cover the project costs, plus a rate of return approved by the Public Utility Commission. That would be similar to how the state regulates transmission and distribution lines, but not generators.

 

ERCOT would control the power plants under the proposal and the units would run intermittently for testing and when needed for emergency supply, the company said.

This “fixed-cost solution,” as Berkshire called it, could be implemented in time for the winter of 2023.

While a so-called capacity market would introduce added costs, it would also reduce uncertainty, Berkshire said.

The company said it would offer a $4 billion performance guarantee provided by an investment graded counterparty.

Berkshire said the proposal would not impact the current dynamics of Texas’ energy market and does not require the implementation of a complex capacity market. Presumably, that’s because the guaranteed payments apply to its plan only.

But competitors will want to be part of that solution, too. In recent years, generators have proposed a capacity market for Texas, and lawmakers have passed on those bills.

 

[ValueMaven]

https://www.texastribune.org/2021/03/25/warren-buffett-texas-power-plants/

[John Hjorth]

Each to their own,

 

The whole situation with regard to Texan energy supply is to me so lame. [it's now about 20 years - or so - ago here [Denmark, Northern Europe], that the grid [basically] got burried into the ground - to avoid such situations as in Texas recently]].

 

I remember Mr. Flatt constantly over the last few years  talking about funds to step in to solve basic problems & provide solutions for basic needs, while public authorities or entities simply can't, or won't,  deliver the services needed for the population in certain areas.

[Spekulatius]

Each to their own,

 

The whole situation with regard to Texan energy supply is to me so lame. [it's now about 20 years - or so - ago here [Denmark, Northern Europe], that the grid [basically] got burried into the ground - to avoid such situations as in Texas recently]].

 

I remember Mr. Flatt constantly over the last few years  talking about funds to step in to solve basic problems & provide solutions for basic needs, while public authorities or entities simply can't, or won't,  deliver the services needed for the population in certain areas.

 

It sounds like Texas prefers to pay $5-10B every decade or so, while also  sitting in the cold for a week or so, rather than investing $8B once and be done with it.

[DooDiligence]

Each to their own,

 

The whole situation with regard to Texan energy supply is to me so lame. [it's now about 20 years - or so - ago here [Denmark, Northern Europe], that the grid [basically] got burried into the ground - to avoid such situations as in Texas recently]].

 

I remember Mr. Flatt constantly over the last few years  talking about funds to step in to solve basic problems & provide solutions for basic needs, while public authorities or entities simply can't, or won't,  deliver the services needed for the population in certain areas.

 

It sounds like Texas prefers to pay $5-10B every decade or so, while also  sitting in the cold for a week or so, rather than investing $8B once and be done with it.

 

Rugged individualists?

 

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        U

[ValueMaven]

https://www.brkenergy.com/assets/pdf/2021-fiic-update.pdf

[gfp]

https://www.brkenergy.com/assets/pdf/2021-fiic-update.pdf

 

Thanks for posting the updated presentation ValueMaven.  Good stuff

[bt1]

In slide ‘BHE GT&S Acquisition Overview ‘, it is stated “BHE financed the acquisition with 4.0% perpetual preferred stock issued to certain subsidiaries of Berkshire Hathaway Inc. for $3.75 billion, ”

Would anyone know if this is a common tax advantageous move or something more…

[ValueMaven]

cheaper source of capital and highlights the capital allocation between and under the Berkshire umbrella ...

 

Interesting to note that Greg Abel owns 1% of BHE - or $570M stake in the business. 

[John Hjorth]

In slide ‘BHE GT&S Acquisition Overview ‘, it is stated “BHE financed the acquisition with 4.0% perpetual preferred stock issued to certain subsidiaries of Berkshire Hathaway Inc. for $3.75 billion, ”

Would anyone know if this is a common tax advantageous move or something more…

cheaper source of capital and highlights the capital allocation between and under the Berkshire umbrella ...

 

Interesting to note that Greg Abel owns 1% of BHE - or $570M stake in the business.

 

Please note Berkshire Hathaway 2020 Annual Report, p. K-101 :

Note 17 : Outstanding notes and other borrowings :

 

A bit processed [& thereby simplified]:

 

BHE : USD B 52.153, &

BNSF : USD B 23.220,

Total : USD B 75.373.

 

And then [same page]:

 

... BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of the assets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure debt. These borrowing arrangements generally contain various covenants, including covenants which pertain to leverage ratios, interest coverage ratios and/or debt service coverage ratios. In November 2020, BHE’s subsidiary debt increased $5.6 billion for the debt assumed in connection with the Dominion pipeline business acquisition. See Note 2 to the Consolidated Financial Statements. During 2020, BHE and its subsidiaries also issued new term debt of approximately $7.6 billion with maturity dates ranging from 2025 to 2062 and a weighted average interest rate of 3.2% and repaid $3.2 billion of term debt and reduced short-term borrowings. ...

 

When you have read so far, and taken it in ... - please read it again!

 

-Covenants related to leverage ratios, interest coverage ratios &/or debt service coverage ratios! -Imagine a debt holder approaching Berkshire with an allegation of breach ... -What do you think would happen? [My bet : Allocation to the [non-existent] department of "Berkshire "Academia""] : Just let BHE issue more preferred capital!, - which Berkshire itself will finance / take on.

 

- - - o 0 o - - -

 

This is all about minimizing & reducing "roll over" / refinancing risk [on USD 52 B] in a "100 year "black swan" [frozen financial markets] event" [, which happens much more frequently than every 100 years].

[ValueMaven]

This latest BHE presentation is awesome.  I really had no idea how large of a operation BHE really is. 

[kh812000]

BHE must be loving this Biden Infrastructure proposal.   This new Grid Deployment Authority is exactly what BHE Infrastructure CEO Chris Brown was asking for (https://www.linkedin.com/pulse/more-than-pipe-dream-how-we-can-better-deploy-electron-chris-brown).

 

BHE has physical locations which are THE best locations for wind & solar.  THE key bottleneck was building transmission to move cheap energy sources to population centers.  With a Federal Grid Deployment authority permitting now can be like gas pipeline permits which takes 1.5 yrs for permit compared to 10 years for transmission permitting....  Surprised BRK is down on this.   

Suggests none is aware of the big implications....

[Value_Added]

I’d love to see BHE acquire the upcoming spin-off generation business from EXC.  It will be a large (largest in U.S?) clean energy portfolio and it will - assuming the proposed legislation gets passed in IL - be guaranteed money for the large nuclear fleet which is largely profitable already.

[ValueMaven]

https://www.insurancejournal.com/news/southcentral/2021/04/16/610232.htm

[ValueMaven]

https://www.wsj.com/articles/texas-electrical-grid-bigger-disaster-february-freeze-black-starts-11622124896?mod=searchresults_pos6&page=1

This is an extremely interesting article on a topic I knew nothing about.  Basically Texas was very close to having a total grid failure.  Hopefully this report - which has over 600 comments - highlights the need for reform in their power market.  Still optimistic that BHE is involved somehow in a solution.  The ideal high CAPEX, fixed return type of capital outlay we love to see.  

Edited May 29, 2021 by ValueMaven

[gfp]

Gates-backed Nuclear reactor company TerraPower and Berkshire's PacifiCorp plan to build one of the new Natrium reactors at the site of a retiring coal plant.  345 megawatt sodium-cooled fast reactor with molten salt-based energy storage for peaking.  

 

https://www.reuters.com/business/energy/utility-small-nuclear-reactor-firm-select-wyoming-next-us-site-2021-06-02/