Category Archives: Berkshire Hathaway Energy

Berkshire Provides Financing for Texas Wind Farm

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Berkshire Hathaway’s MidAmerican Wind Tax Equity will provide some of the financing for the Rattlesnake wind project in McCulloch County, Texas. Also providing financing is Citi.

The wind farm project is being built by Renewable Energy Systems (RES) and Chicago-based Goldwind Americas, a subsidiary of China’s Xinjiang Goldwind Science & Technology.

The project will consist of 64 Goldwind 2.5MW Permanent Magnet Direct-Drive (PMDD) 109m turbines, and will be the largest U.S. wind project that Goldwind has outfitted to date.

Goldwind is aggressively building wind projects around the world, and in May announced it will begin construction of a 149 wind turbine, 530MW wind farm to be called the Stockyard Hill Wind Farm in Australia.

RES is the world’s largest independent renewable energy company with a 12 GW portfolio of wind and solar energy projects.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Salt River Project to Join Western Energy Imbalance Market

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Another utility is joining the western Energy Imbalance Market (EIM) that has been saving two Berkshire Hathaway utilities, PacifiCorp and NV Energy, millions of dollars a year.

The Salt River Project (SRP) signed an agreement for the Phoenix-based municipal utility to participate in the EIM beginning in April 2020.

“The EIM produces efficient use of resources and lower costs of energy for participating utilities,” said Steve Berberich, ISO President and CEO. “We welcome Salt River Project to the western EIM and look forward to working with the utility for a seamless entry in 2020.”

SRP is a community-based, not-for-profit public power utility and the largest provider of electricity in the greater Phoenix area. It serves more than 1 million customers and is the metropolitan area’s largest supplier of water.

It is estimated that SRP, which has been serving central Arizona since 1903, can save up to $4.5 million annually by participating in the EIM.

“The EIM can help save money for SRP and its customers by providing real-time access to the lowest cost resources across a significant portion of the Western grid,” said John Coggins, Senior Director of Power Delivery. “It will complement SRP owned generating resources and energy purchases from the wholesale market.”

The western EIM’s advanced market systems automatically find the lowest-cost energy to serve real-time consumer demands of participating utilities. This market enables utilities to buy and sell power more efficiently in the hour before the energy is needed, with five-minute plant dispatching, which result in improved efficiencies and cost savings.

Current western EIM participants, which include the two Berkshire Hathaway Energy companies, have realized savings totaling nearly $142 million since the wholesale market was launched in November 2014.

Utilities now active in the western EIM include Oregon-based PacifiCorp; NV Energy of Las Vegas, NV; Puget Sound Energy of Washington state; and Arizona Public Service of Phoenix, Ariz.

Other utilities that have formally agreed to join the EIM include Portland General Electric on October 1, 2017, Idaho Power on April 1, 2018, and Seattle City Light and Balancing Area of Northern California/Sacramento Municipal Utility District on April 1, 2019.

The western EIM serves utility consumers in Arizona, California, Idaho, Nevada, Oregon, Utah, Washington, and Wyoming.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Data Centers Offer Growth Opportunity for NV Energy

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Berkshire Hathaway’s NV Energy is looking towards an expanding number of Nevada-based data centers to fuel its growth.

The key is so called green tariffs, where corporations negotiate that all the power will come from renewable sources.

In January 2017, NV Energy and Apple reached an agreement to build 200 megawatts of additional solar energy in Nevada by early 2019. The project will support Apple’s renewable energy needs for its Reno data center. And in May, Apple announced that it had committed $1 billion too expand its data center at the Reno Technology Park.

Reno has become a hub for giant data centers powered by renewable energy, and in addition to Apple, Google has a data center there as well.

NV Energy has filed an application with the Public Utilities Commission of Nevada (PUCN) to enter into a power purchase agreement (PPA) for the solar power plant.

The project will bring NV Energy’s total to more than 529 megawatts of new solar resources in construction in Nevada or under review for approval.

Why Nevada for Data Centers?

Key to data centers is reliability, and Nevada offers several important benefits weather-wise in that area. In addition to having lots of sunshine for solar power, the state doesn’t suffer from floods, hurricanes or tornados.

There already are 491 megawatts of universal solar resources in Nevada currently serving NV Energy customers. Apple will also dedicate up to 5 megawatts of power to NV Energy’s future subscription solar program for residential and commercial customers.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Did the KCC Open the Door for Berkshire to Make a Bid for Westar Energy?

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On April 19, the Kansas Corporation Commission torpedoed the planned acquisition of Westar Energy by Great Plains Energy.

Westar is the largest electric utility in Kansas and the combined companies would have served approximately 950,000 Kansas customers.

The KCC rejected the merger as bad for consumers, and noted what they called an excessive purchase price, requiring GPE to take on significant debt. They noted that the $4.9 billion acquisition premium exceeded GPE’s $4.8 billion market capitalization by $100 million.

With the merger dead, the big question is whether it opens the door for Berkshire Hathaway Energy to make another run at Westar Energy. BHE was in the running the last time around.

Westar Energy is a Natural Fit for Berkshire

With a market cap of roughly $7 billion, Westar is in the same price range as NV Energy, which Berkshire acquired in December 2013 for $5.6 billion.

In addition to just adding to Berkshire’s energy assets, the acquisition makes sense geographically. BHE has already partnered with Westar on Prairie Wind Transmission, LLC, a 108-mile, 345-kilovolt high-capacity electrical transmission line in south-central Kansas that was completed in 2014.

If BHE proves to be interested, it may face competing bids from Ameren Corporation, as well as an investor consortium that includes Borealis Infrastructure Management Inc. and the Canada Pension Plan Investment Board.

Both Ameren and the CPPIB were interested in Westar before the Great Plains merger was signed, and they may again return to the bidding.

Like BHE, Ameren’s service area in neighboring Missouri also fits well with Westar, which provides power for approximately 687,000 customers in much of east and east-central Kansas.

Unlike Great Plains Energy, BHE’s financial strength may enable it to overcome the KCC’s concerns, and add another valuable energy asset to Berkshire’s portfolio.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Rocky Mountain Power’s 20-Year Plan Boosts Solar and Wind

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Berkshire Hathaway’s Rocky Mountain Power has unveiled a 20-year plan to provide electricity to its customers that includes adding more solar and wind and making existing wind turbines more efficient.

The $3.5 billion plan also incorporates building a segment of the Gateway West transmission line to facilitate the wind expansion.

The Integrated Resource Plan (IRP) was filed with utility regulators and is used as a road map to help the company provide reliable electric service to customers at the lowest cost. The 2017 IRP includes the following:

• Upgrading more than 900 megawatts of existing wind plants with larger blades and newer technology to generate 20 percent more energy in a wider range of wind conditions and capture federal production tax credit value for customers

• Beginning construction on a segment of the Gateway West 500-kilovolt transmission line between Medicine Bow, Wyoming, and the Jim Bridger power plant in the southwestern part of the state. The 140-mile line would enable additional wind generation, improve efficiency and relieve transmission congestion

• Facilitating construction of up to 1,100 megawatts of new wind projects, primarily in Wyoming, by the end of 2020, capturing federal production tax credit value for customers

• Adding up to another 859 megawatts of new wind – 85 megawatts in Wyoming and 774 megawatts in Idaho – between 2028 and 2036

• Building up to 1,040 megawatts of new solar between 2028 and 2036. Approximately 77 percent of the solar is assumed to be built in Utah and 23 percent to be built in states served by Pacific Power.

• Continuing a cost-conscious transition that adds more energy diversity, the plan incorporates the company’s environmental compliance obligations for its coal plants.

“This plan provides more diversity in the energy we use, which helps us keep electricity prices low for customers and improves the economies of our states,” said Cindy A. Crane, Rocky Mountain Power President and CEO. “The proposal is also a major investment that will produce more jobs, provide a stronger tax base and build transmission lines that will deliver reliable energy more efficiently for years to come.”

By moving to complete the wind upgrades and new wind developments by 2020, the company will be able to use federal production tax credits, which will help cover the costs of the investments and provide a net savings for customers over the life of the projects.

“This ambitious plan – a nearly $3 billion investment in Wyoming – diversifies Wyoming’s economy, expands markets, presents workforce training opportunities, adds jobs and strengthens the tax base in local communities,” said Wyoming Governor Matt Mead. “I look forward to working closely with Rocky Mountain Power. I see great potential for Wyoming workers and rate payers as this plan is implemented.”

Energy efficiency continues to play a key role in the company’s long term plans. The 2017 IRP anticipates energy efficiency will meet 88 percent of the energy growth needs during the next 10 years – up from 86 percent from the 2015 forecast.

A full IRP is developed every 2 years and an update is filed during off years.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Not All Rotten Apples for Berkshire in Nevada

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There’s no doubt that the last few years have been a surprisingly rough time for Berkshire Hathaway’s NV Energy in Nevada.

One the one front, it has been in a battle with the roof-top solar industry over the hearts, minds, and wallets of retail customers.

On the other front has been the casino industry and its push for cheaper commercial power for its ubiquitous neon and blazing light bulbs.

Losing customers is not the path to grow a business, and when in October 2016 both MGM Resorts and Wynn Resorts paid tens of millions to exit the NV Energy power grid, it looked like the shiny red apple of NV Energy that Berkshire acquired for $5.6 billion in cash in 2013 might have a few worms in it.

So, it’s nice to get some good news that Berkshire has signed a major customer to a new solar power agreement. And that customer is a high-profile customer, Apple.

NV Energy and Apple reached an agreement in January to build 200 megawatts of additional solar energy in Nevada by early 2019.

The projects will support Apple’s renewable energy needs for its Reno data center.

NV Energy is filing an application with the Public Utilities Commission of Nevada (PUCN) to enter into a power purchase agreement (PPA) for the solar power plant. The project will bring NV Energy’s total to more than 529 megawatts of new solar resources in construction in Nevada or under review for approval.

This is in addition to the 491 megawatts of universal solar resources in Nevada currently serving NV Energy customers. Apple will also dedicate up to 5 megawatts of power to NV Energy’s future subscription solar program for residential and commercial customers.

“We are proud to play a role in helping Apple meet their energy needs with Nevada’s abundant solar resource,” said Paul Caudill, president and CEO of NV Energy. “In partnership with our customers, we continue to develop a more balanced fuel mix in a way that benefits the local economy by providing hundreds of jobs for Nevadans, particularly those in the International Brotherhood of Electrical Workers local 357 and 396, and advances the state’s policy goals.”

“Investing in innovative clean energy sources is vital to Apple’s commitment to reaching, and maintaining, 100 percent renewable energy across all our operations,” said Apple’s vice president for environment, policy and social initiatives Lisa Jackson. “Our partnership with NV Energy helps assure our customers their iMessages, FaceTime video chats and Siri inquiries are powered by clean energy, and supports efforts to offer the choice of green energy to Nevada residents and businesses.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire’s Energy Unit on the Uptake with use of Predictive Analytics

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There is no doubt that these days there’s power in big data. And for Berkshire Hathaway Energy there’s literally more power that can be derived at lower cost through the use of predictive analytics.

BHE has signed a deal with recent start-up Uptake Technologies to look for early sign that its wind turbines might be failing due to damage.

Founded by entrepreneur and investor Brad Keywell, Uptake is a predictive analytics SaaS platform that delivers solutions in major industries that increase productivity, reliability, and safety. Uptake’s platform aggregates enterprise and external data and applies cross-industry data science to produce high-value, actionable insights. Uptake’s platform is powered by a continuous feedback loop, recommending impactful actions that are then optimized by human intelligence.

Keywell is also the Managing Partner of Lightbank, a venture fund investing in disruptive technology businesses.

The Uptake agreement is only the latest move as Berkshire’s commitment to wind power has rapidly grown.

In April 2016, Berkshire Hathaway Energy announced plans for a $3.6 billion, 2,000 megawatt wind farm in Iowa known as Wind XI. The plant, which will feature 1,000 wind turbines, and will be owned by MidAmerican Energy Company, a unit of Berkshire Hathaway Energy.

When the wind farm is completed, MidAmerican will generate 85 percent of its energy in Iowa from wind.

“We have a dream to deliver 100 percent renewable energy to our customers,” MidAmerican CEO Bill Fehrman said during the announcement of the Iowa project.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Rumored to Be Bidder in Australian Utility

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Berkshire Hathaway’s MidAmerican Energy Company, a subsidiary of Berkshire Hathaway Energy, is rumored to be a bidder for Australian utility Endeavour Energy.

Endeavor Energy is a government owned electricity distributor that supplies electricity to 2.4 million people in households and businesses across Sydney’s Greater West, the Blue Mountains, Southern Highlands, the Illawarra and the South Coast.

A fifty-percent interest in Endeavor is being sold in a Deutsche and UBS-run auction, and there are currently three consortiums in the bidding.

However, a fourth consortium made up of MidAmerican Energy, Colonial First State and Canadian Pension Plan Investment Board is rumored to also be interested.

Berkshire Hathaway Energy is already active in the Australian energy market. It owns CalEnergy, which is currently drilling for natural gas in Australia’s Whicher Range gas field.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Western Energy Imbalance Market Brings Significant Savings to Berkshire-Owned Utilities

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The western Energy Imbalance Market (EIM), which includes Berkshire Hathaway’s PacifiCorp and NV Energy, produced benefits of $28.27 million in the fourth quarter of 2016.

NV Energy total benefits in Q4 2016 were $3.07 million. PacifiCorp saw benefits of $8.99 million, while the ISO realized $8.67 million.

The benefits since the real-time market was launched in November 2014 now total $142.62 million. The EIM also displaced about 10,011 metric tons of CO2 emissions from less clean resources by using surplus renewable energy from California that otherwise would have gone unused, according to the fourth quarter report.

“We continue to see growing energy savings to consumers in the West,” said ISO President and CEO Steve Berberich. “We are pleased with the continued growth of the market and interest from prospective participants.”

The EIM uses state-of-art technology to automatically optimize the real-time grid and find low cost energy regardless of its location to serve consumers in Arizona, California, Idaho, Nevada, Oregon, Utah, Washington, and Wyoming.

Portland General Electric will enter the EIM in October 2017 followed by Idaho Power in April 2018 and Seattle City Light in April 2019.

The Balancing Area of Northern California/Sacramento Municipal Utility District (SMUD) and the El Centro Nacional de Control de Energía (CENACE) have separately announced their intention to enter or explore entering the EIM.

Another benefit comes from lessening the amount of energy reserves utilities must carry as they can lean upon resources outside of their service area to serve their load at less cost.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

No Hope for Berkshire in FERC Market Rate Dispute

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The Federal Energy Regulatory Commission (FERC) has stuck to its June 2016 decision that requires Berkshire Hathaway’s NV Energy to redo its rates, including issuing revised rates that go back retroactively to Jan. 9, 2015.

On December 21, FERC declined to revisit the ruling stating, “The Berkshire MBR Sellers’ request for rehearing is denied.”

FERC’s June decision requires the affected utilities to provide consumer refunds. FERC found that NV Energy, and Berkshire’s other utility PacifiCorp, were not allowed to sell electricity at market rates.

In the June decision FERC stated, “…we find that the additional information supplied by the Berkshire MBR Sellers has failed to rebut the presumption of market power in the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas. In the absence of reliable delivered price test (DPT) analyses rebutting the presumption of market power, we find that continuation of the Berkshire MBR Sellers’ market-based rate authority in these four balancing authority areas is not just and reasonable.”

FERC went on to order new rate plans.

“Therefore, we herein revoke the Berkshire MBR Sellers’ market-based rate authority in the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas. Accordingly, the Berkshire MBR Sellers are directed to file revised market-based rate tariffs further limiting sales at market-based rates to areas outside of the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas within 30 days of the date of this order.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.