Tag Archives: Berkshire Hathaway Energy

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.

Special Report: When Will Berkshire Finally Hit it Big in Natural Gas?

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In November 2015, Berkshire Hathaway Energy’s Australian subsidiary, CalEnergy Resources, drilled a test well in Western Australia in what the company called modestly a “significant gas field.”

The test well heralded a potential profit gusher as it confirmed an enormous gas field that is four trillion cubic feet of gas-in-place “significant.”

First the Facts

Exploration permit EP 408 is located approximately 280 kilometers south of Perth, and covers both the Whicher Range and Wonnerup gas fields. These gas fields have long been known, and were first discovered in 1968 and 1971, respectively. The fields are located in ancient sandstone reservoirs nearly four kilometers underground.

The fields contain an estimated four trillion cubic feet gas-in-place, and Berkshire’s share currently stands at approximately 84%. Other partners include Which Range Energy.

Slow But Steady Progress

Peter Youngs, the Managing Director of CalEnergy Resources Group, which is owned by Berkshire Hathaway Energy, recently updated MazorsEdge on the progress on the development of the gas field.

“We have over 50 years of data from all of the prior activity on the field that we are assimilating and integrating with our well testing results,” Young states. “Parts of our recent well test were encouraging but it has also shown us that we have not yet answered all of the technical issues that might impinge on a commercialization decision and hence the detailed integration work.”

Young anticipates updating stakeholders on the current status of the work and CalEnergy’s next steps towards the end of the second quarter 2017.

So, will 2017 be the year that Berkshire finally gets to profit from the Whicher gas fields? Not likely at the current pace, but 2018 is not so far off.

© 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.

Berkshire Sets Sights on Alamo 6 Solar Farm

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While some have questioned whether the new Trump administration will change any of Berkshire Hathaway’s renewable energy plans, it doesn’t seem to be affecting their acquisition strategy.

Berkshire Hathaway Energy is reportedly looking to purchase the Alamo 6 solar farm from San Antonio, Texas-based solar developer OCI Solar Power.

OCI Solar Power has filed for state approval of the sale.

The 110-megawatt solar project will supply power to CPS Energy under an already signed agreement.

While Berkshire, has not released a statement, Berkshire’s purchase price is said to be $385 million.

OCI Solar Power is a subsidiary of OCI Company, a Korean chemical and renewable energy company.

Working with Utility-Scale Developers

Berkshire has a strategy of purchasing solar projects from outside developers, including the 579 megawatt Solar Star Projects (formerly Antelope Valley Solar Projects), which are two co-located solar installations in Kern and Los Angeles Counties in California that were purchased from SunPower in 2013. And Berkshire acquired two solar projects from Geronimo Energy in 2015 and 2016.

© 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.

Money Flowing Into Solar Development to Benefit Berkshire Hathaway

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Money is flowing into the solar development and construction sector, and this could benefit Berkshire Hathaway’s portfolio of utilities.

The money speeds the construction of utility-scale solar power projects that utilities then purchase to replace antiquated fossil-fuel powered generation plants.

One example is Origis Energy, a Miami based international solar development and construction firm with a photovoltaic portfolio of over 600 megawatts, and Baltisse, the European private investment firm of Mr. Filip Balcaen.

Baltisse has committed to provide up to a total of $100 million in growth capital for Origis. The capital comes as private investment money is ramping up investment in the U.S. solar market.

The funding empowers Origis to strengthen its offerings to utilities and large scale corporate energy buyers seeking solar as a clean energy alternative for their power generation needs.

Origis has already developed more than 100 projects worldwide totaling 600+ megawatts to date of solar capacity for utilities, including Berkshire Hathaway’s Pacific Corp.

“The strength of our balance sheet as an independent power producer in the U.S. is a critical consideration for utility and corporate procurement executives,” said Guy Vanderhaegen, Chief Executive Officer of Origis Energy. “We have crossed major milestones in our work for leading utilities in the U.S. This investment and the board guidance of Filip Balcaen makes Origis an even stronger partner to fulfill the solar objectives of large scale energy users in the U.S.”

Berkshire Hathaway Energy has been busy buying up renewable energy projects, including two portfolios of projects developed by Geronimo Energy, LLC. that were acquired in 2015 and 2016.

© 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.