Category Archives: Berkshire Hathaway Energy

Berkshire Utilities Have $13+ Million in Benefits from Western Energy Imbalance Market in 4th Qtr 2017

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The California Independent System Operator (ISO) has released its western Energy Imbalance Market (EIM) 2017 fourth quarter benefits report that shows the real-time energy imbalance market produced $33.46 million benefits for its six participating members.

During the fourth quarter of 2017 two Berkshire Hathaway Energy companies had over $13 million in benefits. PacifiCorp realized benefits of $6.83 million and NV Energy saved $6.45 million.

The total benefits since the western regional market was launched in 2014 now total $288.44 million for all six members.

Western EIM participants helped reduce carbon emissions in the region by 7,730 metric tons by using 18,060 megawatt-hours of excess renewable energy that otherwise would have been turned off; this translates into removing 1,655 passenger cars from the highways for a year.

“The ISO’s western EIM continues its positive uptick in benefits, accruing savings as it promotes a greener and more reliable energy grid,” said ISO President and CEO Steve Berberich. “We are very pleased with the results for all participants in this growing market.”

The EIM’s state-of-art technology automatically finds and delivers low-cost energy to serve consumers in California, Arizona, Oregon, Washington, Utah, Idaho, Wyoming and Nevada.

In addition to leveraging the diverse resources from a larger pool, the effective use of carbon-free generation provides added environmental benefits. Besides using low-cost energy, EIM utilities reduce their costs by being able to join together to decrease the amount of energy reserves that individual utilities must carry in real time to manage load.

© 2018 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.

eVolution Networks Inks Strategic Deal with China’s Largest Data Center

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eVolution Networks, a Berkshire Hathaway Energy portfolio company, has announced a strategic commercial agreement with China Telecom for purchasing software licenses of eVolution’s Smart Energy Solution AI platform, generating 40% savings in Data Centers’ energy consumption across China.

The software first deployed in one of China Telecom south-west region, in some of the largest data center facilities. The agreement was signed after rigorous testing and simulations in various China Telecom data centers, earning the approval and certification of the China Telecom Beijing Research Institute (CTBRI).

eVolution’s SES is a unique and innovative AI software platform capable of using off-peak periods of services in a data centers to save significant amounts of energy. After months of testing and simulations, CTBRI approved the ability and reliability of SES and decided to implement the solution in operational data centers across China. CTBRI completed the integration of internal systems with eVolution’s SES engine and developed a custom interface to monitor, support and measure electricity savings.

China Telecom is the largest owner of data centers and Internet hosting services in China. It owns hundreds of data center facilities across the country that accommodate millions of servers. Apart from providing hosting services to other companies, China Telecom offers its own services, such as IPTV, high-speed internet, intranet services.

“This is a very significant milestone for both China Telecom and eVolution Networks,” says Adam Amitai, Chief Information Officer at eVolution. “China’s 5 years energy plan is a massive call to action for major Chinese corporations. eVolution Networks is committed to helping Chinese data centers become greener and more profitable. We are proud to have China Telecom as our first Chinese customer deploying artificial intelligence technology to reduce their carbon footprint. Our mission is to harness the power of artificial intelligence to improve the data center industry efficiency and profitability in China and globally.”

© 2018 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

Bum Knee Leads to Rising Star at Berkshire Hathaway Energy

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A torn ACL may have kept Adam Wright from fulfilling his dreams of being a pro football player, but his backup plan led to his becoming one of Berkshire Hathaway’s rising stars.

After Greg Abel was named Vice Chairman of Berkshire, MidAmerican Energy CEO Bill Fehrman was promoted to president and CEO of Berkshire Hathaway Energy, and Adam Wright moved up to become the new CEO of MidAmerican Energy.

Wright had been serving as the vice president for gas delivery.

Wright’s initial career ambitions began on the gridiron where was a star tailback for Nebraska-Omaha. Unfortunately, a torn ACL meant his two year pro career for the New York Giants was limited to rehabbing his knee. Thankfully, the civil engineering major had interned at MidAmerican Energy during his college days, so when his career ended after he tore his ACL running down the field in practice, the Omaha native headed back to Berkshire Hathaway Energy where he spent his first nine years at Northern Natural Gas. He then moved on to manage wind development and operation for MidAmerican.

Now Wright’s the new head of MidAmerican Energy, a Berkshire Hathaway Energy subsidiary that provides electric and natural gas service to nearly 1.5 million customers in Iowa, Illinois, Nebraska and South Dakota.

Who knows? At the ripe old age of 40, it may not be his last promotion.

© 2018 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 Promotes Fehrman to CEO of Berkshire Hathaway Energy

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In the wake of Greg Abel being named Vice Chairman of Berkshire Hathaway, William J. Fehrman, 57, has breen promoted to President and CEO of Berkshire Hathaway Energy.

Fehrman had been the head of Berkshire Hathaway Energy’s subsidiary MidAmerican Energy. Fehrman has been with the company since 2006.

During his time at MidAmerican, Fehrman oversaw the company’s growth into one of the leaders in providing renewable energy, primarily from wind power.

Fehrman is one of 18 Chief Executive Officers chosen to represent the electric industry on the Electricity Subsector Coordinating Council (ESCC). As the principal liaison between the federal government and electric power sector, the Council coordinates efforts to prepare for and respond to national-level disasters and threats to critical infrastructure that could impact national security and public safety. Fehrman serves as the executive sponsor of the Cyber Mutual Assistance Program, vice chair of the Electricity Information Sharing and Analysis Center (E-ISAC) Member Executive Committee, and provides leadership to Berkshire Hathaway Energy’s co-chair of the Transformer Transportation Working Group.

Prior to 2006, Fehrman was president and CEO of Nebraska Public Power District, based in Columbus, Nebraska. He joined Nebraska Public Power District in May 1981 and held various positions across the business, including assignments in fossil and nuclear generation, until becoming CEO January 1, 2003.

Fehrman graduated in 1984 from the University of Nebraska in Lincoln with a bachelor’s degree in civil engineering. In 1998, he earned a master’s degree in business administration from Regis University, Denver, Colorado. He also completed the Reactor Technology Program for utility executives from the Massachusetts Institute of Technology and National Academy for Nuclear Training as well as the Institute of Nuclear Power Operations Senior Nuclear Plant Management Course. Fehrman is a former member of the National Nuclear Accrediting Board.

© 2018 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.

Greg Abel and Ajit Jain Join Berkshire Board

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In a move that clearly foreshadows the next generation of Berkshire Hathaway leadership, Berkshire’s Board of Directors voted to increase the number of directors comprising the entire Board of Directors from twelve to fourteen. After making that move, Gregory E. Abel and Ajit Jain were then elected to serve as Directors to fill the resulting vacancies on the Board of Directors.

In connection with their election to the Board of Directors, Warren Buffett, Berkshire Hathaway’s Chairman and CEO, appointed Mr. Abel to be Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations and Mr. Jain to be its Vice Chairman – Insurance Operations.

Mr. Abel joined Berkshire Hathaway Energy Company in 1992 and currently serves as its Chairman and CEO. Mr. Jain joined the Berkshire Hathaway Insurance Group in 1986 and currently serves as Executive Vice President of National Indemnity Company with overall responsibility for leading Berkshire’s reinsurance operations.

In March 2016, Buffett appointed Abel to the Board of Kraft Heinz, a move that showed his confidence in the 55-year-old manager.

For the time being, Buffett and Munger will continue in their existing positions, including being responsible for significant capital allocation decisions and investment activities.

© 2018 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.

The Huge Hidden Asset Within Berkshire Hathaway

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Anyone that follows Berkshire Hathaway knows that it is sitting on over $100 billion in cash. They also know about the company’s over $92 billion in insurance float. But there’s another huge asset that Berkshire is sitting on and hint, it’s not Bitcoin, Ethereum, Ripple, Litecoin, or any other cryptocurrency.

It’s something far more tangible, and as the old expression goes, “It’s as good as gold.” In this case it’s not gold, it’s natural gas.

Berkshire Hathaway Energy’s Australian subsidiary, CalEnergy Resources has the rights in Australia to what the company called a “significant gas field.”

How significant?

The gas field, which is located below the Whicher Range, is estimated to contain four trillion cubic feet of gas-in-place.

CalEnergy is the sole titleholder and operator of the exploration permit EP 408 located approximately 280 kilometers south of Perth, and covers both the Whicher Range and Wonnerup gas fields.

The Long, Very Slow History of the Whicher Range Gas Fields

The gas fields were first discovered in 1968 and 1971, respectively, and are located in ancient sandstone reservoirs nearly four kilometers underground.

The big problem since its discovery has been how to get the gas and not lose your shirt doing it.

According to CalEnergy, the field is a candidate for traditional drilling methods, and hydraulic fracking is not considered a viable option.

In 2016, Peter Youngs, the Managing Director of CalEnergy Resources Group, discussed with MazorsEdge the progress on the development of the gas field, noting that “the field represents a large in place gas resource, its characteristics are challenging and there is much work still remaining to move this resource to a commercially developable status.”

As for the initial test well, Youngs said at the time, “we are encouraged by the flow rates, as seen during the test, but that the critical commercial assessment (of the flow rates) is subject to a period of substantial subsurface data integration work (which is ongoing).

Youngs also doubted that the field could be commercialized by 2017, and that has proven true.

As to when the gas field could start to produce meaningful amounts of natural gas, it still looks to be years away.

CalEnergy recently requested and received, a variation to the permit work program from the Department of Mines and Petroleum (DMP) to undertake reservoir pressure monitoring – this involves data gauges being placed in the Whicher Range 1 (WR-1) and Whicher Range 4 (WR-4) wells.

The company is continuing with reservoir pressure monitoring, and is focused on enhancing their understanding of reservoir behavior.

In the interim, CalEnergy has launched a Care and Maintenance Environment Plan (CMEP) to maintain the current well sites and drilling pads.

Will patience be a virtue?

For fifty years, the gas fields of the Whicher Range have both held out the promise of enormous economic benefit, and the frustration of inaccessibility.

CalEnergy notes that in the past, “feasibility studies have failed to identify an economic technical strategy for the development of commercial gas production.”

The good news is that as a result of its tests, the company now believes that gas recovery is feasible, and Berkshire’s patience will pay eventually off.

© 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 Hathaway Orders More Vestas Wind Turbines

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Berkshire Hathaway’s MidAmerican Energy has placed orders for 70 MW of V110-2.0 MW turbines for its the Wind XI wind farm in Iowa.

The turbines will be manufactured at Vestas’ four Colorado factories with expected delivery in the second quarter of 2018.

In August 2016, The Iowa Utilities Board approved MidAmerican’s request to invest $3.6 billion to install additional wind turbines in Iowa by year-end 2019.

The project – Wind XI – is the largest economic development project in Iowa’s history.

When the 2,000-megawatt Wind XI project is completed, MidAmerican’s annual renewable energy generation is expected to reach a level that’s equivalent to 89% of our Iowa retail customers’ annual use.

Wind XI will generate an average of approximately $12.5 million per year in property tax payments, $18 million per year in landowner payments, and $48 million per year in state and local expenditures associated with the 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.

NV Energy Adding to its Renewable Energy Generation Capacity

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Berkshire Hathaway’s NV Energy is continuing to add to its renewable energy generation portfolio. The Nevada-based utility has signed three new long-term power purchase agreements that total100 megawatts. The requests are awaiting approval by the Public Utilities Commission of Nevada.

NV Energy’s President and Chief Executive Officer Paul Caudill noted that the projects include the largest solar array in Northern Nevada at a nameplate rating of 50 megawatts.

“These new projects signal an important step toward NV Energy’s commitment to partner with our customers in order to serve them with 100% renewable energy. Equally important to the low-cost solar energy being added to our customers’ portfolio, these projects benefit Nevada’s working families and provide another opportunity for our construction trade partners to gain skills in the renewable industry,” Caudill said. “We are pleased that all three projects include work site agreements with the International Brotherhood of Electrical Workers.”

It is estimated that up to 250 construction workers and nine permanent positions would be needed for the three projects.

The largest of the three new projects is the 50-megawatt Turquoise Nevada solar project, to be constructed in the Reno Technology Park in Washoe County, Nevada. The project will benefit from a 25-year power purchase agreement with NV Energy and is expected to be operational by the end of 2020.

The Turquoise Nevada solar project is a venture of Estuary Capital Advisors and Sumitomo Corporation of Americas. Sumitomo is an integrated global trading and investment enterprise with ownership in renewable energy facilities totaling 5,000 megawatts worldwide.

NV Energy has submitted a separate request with the Public Utilities Commission of Nevada to utilize the NV GreenEnergy Rider program to help a major customer offset 100 percent of its next phase of growth with solar energy.

“We are excited to help bring the largest solar energy field in Northern Nevada to a reality, and we appreciate the dedication many large Nevada customers have to using the NV GreenEnergy Rider program to offset their energy usage using renewable resources,” stated Pat Egan, NV Energy senior vice-president, renewable energy and smart infrastructure.

The other two new proposed 25-year power purchase agreements are the result of a Request For Proposals that was issued by NV Energy June 14, 2017. The 25-megawatt Techren Solar 3 project will benefit NV Energy customers in Southern Nevada and the 25-megawatt Techren Solar 4 project will benefit customers in Northern Nevada. If approved, the new solar energy projects will be operational on or before September 1, 2020.

The new solar resources will be owned by Techren Solar, LLC and will be located adjacent to the 300-megawatt Techren Solar 1 and 2 projects that are in development in Boulder City’s Eldorado Valley.

“To the best of our knowledge, Techren 3 and 4 are the lowest-cost universal solar power purchase agreements entered into in the United States,” Egan said.

Today NV Energy customers are served by 19 geothermal energy plants, 16 universal-scale solar fields, six hydro projects, five biomass or methane projects and one wind farm. In total, these projects represent more than 1,600 megawatts of nameplate renewable energy capacity. If all were operating at the same time they would generate enough energy to serve nearly a million typical homes in Nevada.

© 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.

MidAmerican Energy Buys Wind Farm from Tradewind Energy

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Berkshire Hathaway continues to add to its renewable energy portfolio. Berkshire’s MidAmerican Energy Co., a subsidiary of Berkshire Hathaway Energy, has purchased the North English Wind Project, which is currently under construction in Iowa.

When completed, North English will generate 340 megawatts of wind energy.

The North English Wind Project is located approximately 60 miles east of Des Moines, Iowa in the high-yielding corn and soybean farmlands of Poweshiek County, Iowa. The wind farm is expected to interconnect to a 345 kV (MIDAM) line located in Poweshiek County.

“We are thrilled to support Iowa’s continued leadership in wind energy through the development of the North English Wind Project,” Jeff Hammond, senior development manager for Tradewind, said in a statement. “MidAmerican Energy Co. has a vision to provide 100 percent renewable energy for its customers, and it’s exciting to partner with them toward achieving that goal.”

According to Tradewind, more than 200 landowners and over 30,000 acres will be involved in the 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.

Commentary: Could the Door Open Again for a Berkshire Acquisition of Oncor?

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Berkshire Hathaway’s ongoing interest in acquiring Oncor Electric Delivery might still have a chance, if only a faint one.

Sempra Energy, which this August outbid Berkshire for Oncor, is running into some of the same resistance that torpedoed the last two attempts to acquire what is the largest distribution and transmission system in Texas.

Sempra’s $9.45 billion bid won out after Berkshire refused to get into a bidding war and stood firm on its $9 billion all-cash consideration that implied an equity value of approximately $11.25 billion for 100% of Oncor.

Now, San Diego-based Sempra has to gain the approval of the Public Utility Commission of Texas, and Commissioner Ken Anderson is raising concerns on the amount of money Sempra will have to raise in order to finance the deal and the credit rating of the company.

The PUC has to rule on whether the Sepra deal is in the public’s interest, and on October 5, Moody’s Investors Service issued a comment titled “Sempra Energy: Revised structure for EFH/Oncor acquisition reduces complexity but transaction remains credit negative.”

Credit negative is not the case with Berkshire. Certainly, financing a deal is not a problem for Berkshire, as it is sitting on over $100 billion in cash that it has been hard-pressed to invest as of late.

Commissioner Anderson’s concern is a valid one, as Oncor has been mired in the decade long financial morass that found its parent company Energy Future Holdings Corp. in bankruptcy after being loaded with $40 billion in debt from a leveraged buy-out engineered by private equity firms KKR & Co. and TPG.

While it’s a longshot that Berkshire can get another shot at Oncor, perhaps a very long shot, the one thing Texas ratepayers need at this point is financial stability.

© 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.