Tag: Berkshire Hathaway Energy

(BRK.A), (BRK.B)

$30 million in annual savings would make most investors wobbly, but in Berkshire Hathaway’s case it is making them more balanced.

In 2014, when Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in a new Energy Imbalance Market (EIM), the market was touted as a way to balance electricity in-flows and out-flows on a regional basis that would bring millions of dollars in benefits to participating utilities.

The EIM began financially-binding operation on November 1, 2014, by optimizing resources across the ISO and PacifiCorp’s balancing authority areas (BAAs), which includes California, Oregon, Washington, Utah, Idaho and Wyoming.

The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region.

Tens of Millions in Benefits a Year

The predicted benefits have proven to be true, and the California Independent Service Operator (CAISO) has been able to quantify the benefits from the April, May, and June 2015 to be $10.18 million.

In its July report, CAISO said that it, “continues to prove EIM’s ability to select the lowest cost resource across the PacifiCorp and ISO balancing authority areas to serve demand and measures benefits within the following categories, which were described in an earlier study conducted by Energy + Environmental Economics (E3)1 for PacifiCorp and the ISO.”

The report noted:

• More efficient dispatch, both inter- and intra-regional, in the Fifteen-Minute Market (FMM) and Real-Time Dispatch (RTD) by automating dispatch every fifteen minutes and every five minutes within PacifiCorp’s two BAAs and between the PacifiCorp and California ISO BAAs.

• Reduced renewable energy curtailment by allowing BAAs to export or reduce imports of renewable generation when it would otherwise need to be economically curtailed.

• Reduced flexibility reserves needed in PacifiCorp BAAs, which saves cost by aggregating the load, wind, and solar variability and forecast errors of the combined EIM footprint. This report introduces the flexibility reserve benefits for PacifiCorp but defers measurement of reduced flexibility reserve benefits for the ISO to future reports due to the need to develop additional measurement techniques.

© 2015 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.

(BRK.A), (BRK.B)

NV Energy, a subsidiary of Berkshire Hathaway Energy, has reached a settlement in regards to the Reid Gardner Generating Station, which is located near Moapa, Nevada.

The $4.3 million settlement comes as NV Energy is working to close the plant as the result of a 2013 vote by the Nevada Assembly to shut down the plant, which was one of the nation’s dirtiest.

Three of the plant’s 100-megawatt generating units have already been decommissioned, and the remaining 257-megawatt generating unit is scheduled to cease operation in 2017.

Settlement to Bring Health and Wellness Benefits

$1.5 million of the settlement, which is the result of a lawsuit filed by the Moapa Band of Paiutes and the Sierra Club, will go to provide a community health wellness center on the Moapa Band of Paiute Indians reservation.

The remaining $2.7 million of the settlement will be used to monitor air quality and purchase water rights.

The settlement will be paid by NV Energy and NV Energy and the California Department of Water Resources.

The Moapa Band of Paiutes has long complained of respiratory problems related to coal ash. They have been supported in their efforts to close the plant by Nevada senator Harry Reid.

Senator Reid welcomed news of the settlement.

“For years the band has suffered the consequences of breathing dangerous dirty air from the Reid-Gardner coal plant and this settlement is a step forward. While the settlement will provide relief and help make the tribe’s home healthier and safer, no amount of money can pay for the sickness caused by a half-century of pollution from the coal plant. The Moapa Band of Paiutes and all Nevadans deserve a clean, healthy environment to raise their families in and pass on to their children.”

A Dwindling Number of Coal-Fired Plants

Most of Nevada Energy’s power comes from cleaner-burning natural gas generating stations, however the company still produces power from the 255 megawatt coal-fired Navajo Generating Station in Page, Arizona, and the 522 megawatt coal-fired North Valmy Generating Station in Valmy, Nevada. Both plants are partially owned by NV Energy.

On July 28, 2014, the EPA finalized a plan to cut pollution from the Navajo Generating Station in order to reduce the haze around nearby national parks and wilderness areas.

Berkshire Moves Toward Renewable Energy

Berkshire Hathaway Energy has already invested more than $15 billion in renewable energy generation projects that are under construction and in operation through 2014, and has pledged to invest up to an additional $15 billion going forward.

© 2015 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.

(BRK.A), (BRK.B)

It’s no surprise when Warren Buffett attends a meeting at the White House, but it was not Buffett who was there this past Monday, it was Greg Abel, who heads up Berkshire Hathaway Energy, and is also rumored to be the leading candidate as Buffett’s successor.

On July 27, Berkshire Hathaway Energy and some of the largest companies in the nation gathered at the White House to officially launch the American Business Act on Climate Pledge, a demonstration of the U.S. private sector’s commitment to taking on the global challenge of climate change.

Greg Abel, who serves as the chairman, president and CEO of Berkshire Hathaway Energy, and Cathy Woollums, senior vice president, environmental services and chief environmental counsel, attended the meeting, which was led by U.S. Secretary of State John Kerry.

Other companies that sent representatives included Alcoa, Apple, Bank of America, Cargill, Coca-Cola, General Motors, Goldman Sachs, Google, Microsoft, Pepsi, UPS and Walmart.

Through participation in the meeting, U.S. business leaders voiced their support for a strong outcome in the international climate negotiations taking place in Paris this December. Participating companies pledged to take specific, quantifiable steps to reduce emissions, increase low-carbon investments, use and build more clean energy, and deploy cleaner vehicles, among other actions.

“As a provider of essential energy services, our customers depend on us to power their lives and livelihoods,” said Abel. “And we know that they expect us to do that in a way that respects the environment we share. For more than a decade, we have been making significant investments to reduce the impact of our operations on the environment and fostering a more sustainable future by developing renewable energy generation and reducing emissions from our facilities. Joining these other U.S. businesses is one more way we can demonstrate our commitment to lead on climate action.”

Berkshire’s Renewable Energy Commitment

Berkshire Hathaway Energy has already invested more than $15 billion in renewable energy generation projects that are under construction and in operation through 2014, and has pledged to invest up to an additional $15 billion going forward.

In May, BHE announced a 400-megawatt wind farm that will be located about 12 miles northeast of O’Neill, Nebraska, and will begin construction this summer. The completion date will be in 2016. The new wind farm will be the largest in the state and will increase Nebraska’s wind energy capacity by nearly 50 percent.

Berkshire Hathaway Energy owns a portfolio of businesses that provide electric and natural gas services to more than 11.5 million customers and end-users worldwide. Its family of businesses includes U.S. utilities MidAmerican Energy Company, NV Energy, Pacific Power and Rocky Mountain Power, as well as interstate natural gas pipeline, electric transmission and renewable energy businesses, and distribution networks in the United Kingdom.

“U.S. utilities have been transitioning to a cleaner generating fleet for years, resulting in a 15 percent reduction of carbon dioxide emissions below 2005 levels,” Abel said. “Berkshire Hathaway Energy is leading by example. We have long supported and made investments to advance climate-friendly solutions that move us forward toward a low-carbon, sustainable future.”

© 2015 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.

(BRK.A), (BRK.B)

Berkshire Hathaway’s effort to change the Public Utility Regulatory Policies Act (PURPA) in order to loosen the regulations on power purchases from small generating facilities has met a dead end.

The changes Berkshire has been aggressively lobbying for have been dropped from the U.S. Senate’s energy bill.

Berkshire Makes Its Case

Last week, Berkshire Hathaway Energy Legislative and Regulatory Affairs Vice President Jonathan Weisgall testified before the Senate Energy and Natural Resources Committee pushing a rule change to make electric utilities in California’s new Energy Imbalance Market that are in noncompetitive markets exempt from having to purchase power from small generation assets known as Qualified Facilities (QFs).

Weisgall‘s prepared statement noted that “In many instances, the power produced by QFs is not needed to replace baseload generation or meet decreasing levels of demand.”

He also noted that “Growth of electricity demand has slowed in each decade since the 1950s. Since PURPA’s enactment, electricity markets have developed to allow utilities to purchase replacement power rather than build baseload plants. BHE’s PacifiCorp utility is experiencing a significant increase in PURPA contract requests, despite the fact that its long-range resource plan shows no need for additional generation resources until 2028. It currently has requests for 3,641 MW of new PURPA contracts, in addition to the 1,732 MW of PURPA contracts that are already executed. The number of PURPA contracts may soon equal PacifiCorp’s average retail load. For example, the 5,373 MW of existing and proposed PURPA contracts at their nameplate capacity would be equal to 79% of PacifiCorp’s average retail load and 108% of PacifiCorp’s minimum retail load.”

Senator Cantwell Objects

Berkshire laid out a proposed amendment to PURPA Section 210 16 U.S. Code § 824a–3 – Cogeneration and small power production, but the objections of Sen. Maria Cantwell (D-WA), who laid out her concerns that it could adversely impact the energy market in the Pacific Northwest, effectively killed the amendment.

© 2015 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.

(BRK.A), (BRK.B)

Forget Berkshire Hathaway as the next owner of Energy Future Holdings’ power distribution subsidiary Oncor.

Back in September 2014, Berkshire Hathaway Energy and several other energy companies, including NextEra Energy and Hunt Consolidated, signed confidentiality agreements for the purpose of exploring the acquisition of Oncor, which was up for auction due to the April 2014 bankruptcy of electric utility Energy Future Holdings. The company went under after being burdened with $40 billion in debt from a 2007 leveraged buyout.

A Texas-Sized Asset

Oncor is a quite a prize. The company is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. The company has the largest distribution and transmission system in Texas; with approximately 119,000 miles of lines and more than 3 million meters across the state.

The End of the Waiting Game

After originally pushing back the auction of Oncor from November 2014 to March 2015, it now looks like no auction will ever happen. Instead, the creditors in the holding companies Energy Future Intermediate Holdings and Energy Future Holdings will take ownership of Oncor.

U.S. Bankruptcy Judge Christopher Sontchi has agreed to a plan by Hunt Consolidated that will see the company take ownership with Oncor’s current management remaining in place.

One that Got Away

Back in June 2014, Warren Buffett proclaimed he was ready to put at least $15 billion into energy generation and transmission assets, and Oncor, with a value of roughly $17.5 billion looked like a good fit.

Transmission lines have been high on Berkshire Hathaway Energy’s wish list of late. In April 2014, the company made a $2.9 billion purchase of Canadian company AltaLink from SNC-Lavalin Group Inc.

Berkshire Hathaway Energy currently has $70 billion in assets, including one of the largest portfolios of renewable energy in the world.

Unfortunately, when it comes to Oncor, this one got away.

© 2015 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.

(BRK.A), (BRK.B)

Berkshire Hathaway’s NV Energy, which powers customers in the state of Nevada, has contracted to buy electricity from First Solar’s soon to be built Playa Solar 2 at the astoundingly low rate of only 3.87 cents a kilowatt-hour.

The rate, a 20-year fixed-rate contract, was submitted to Nevada’s Public Utilities Commission on July 1, 2015.

First Solar is a leader in photovoltaic power with over 10 gigawatts (GW) installed worldwide, and has been aggressively building solar farms, some of which have been purchased by Berkshire Hathaway Energy.

First Solar built the 550 megawatt Topaz Solar Farm, which is now powering 160,000 average California homes, and is owned by BHE Renewables.

Berkshire Leads in Renewables

Berkshire Hathaway Energy’s BHE Renewables has over 1,884 megawatts of power generation derived from solar, wind, hydro and geothermal sources. 1,271 megawatts of that capacity come from solar.

Plunging Solar and Wind Prices

In just the last four years, solar and wind power have gone from promising but expensive power sources to power sources that meet or beat fossil fuel power generation prices that come from coal and oil.

The drop in solar electricity generation costs has been so dramatic that it has outpaced even the experts’ estimates. The U.S. Department of Energy (DOE) noted that “2020 price projections are approximately one-half of what same analysts projected 5-10 years ago.”

The DOE is projecting a decline in solar PV system module prices for utility scale installations from its $4 in 2010 to less than $2 by 2016. Utility-scale PV is defined as ground-mounted systems that are greater than ≥5 megawatts.

Buffett Believes in Renewables

Speaking at the Edison Electric Institute’s annual convention in Las Vegas in 2014, Warren Buffett trumpeted Berkshire’s commitment to renewable energy.

“We’ve poured billions and billions and billions of dollars in retained earnings, and several billion of additional equity, Buffett said. “And we’re going to keep doing that as far as the eye can see.”

© 2015 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.

(BRK.A), (BRK.B)

Will Berkshire Hathaway Energy be left out in the cold due to disruptive changes in the energy market?

It’s a question that BHE and other utilities are starting to both ask and answer, and is particularly relevant to BHE, which has become in less than a decade one of the major players in solar and wind power generation.

With rooftop solar power changing the relationship between consumers and traditional energy producers and distributors, electric utilities are starting to think seriously about the changing landscape that the energy industry will encounter over the next few decades.

The Energy Cloud

The industry has started to refer to this changing marketplace as the “Energy Cloud,” mirroring the cloud computing world, and emphasizing the dynamic nature of the relationship between all parties.

A white paper by market research and consulting team Navigant Research called the Energy Cloud “…a concept that borrows from cloud computing, represents a range of technical, commercial, environmental, and regulatory changes that challenge the traditional hub-and-spoke grid architecture.”

An anticipated transformation in the energy grid that decentralizes many pieces of the energy production has utilities looking at additional revenue sources from unregulated business units. For example, Georgia Power rather than fighting rooftop solar companies is joining them in the installation business through a new subsidiary.

Unregulated Businesses

Meanwhile, Berkshire Hathaway Energy continues to aggressively expand its unregulated businesses, which includes its energy service solutions company Intelligent Energy Systems, and residential real estate sales company Berkshire Hathaway Home Services. It also owns 225 million shares (10%) of Chinese battery and automaker BYD Company Limited.

In the end, it’s all about transformation in an industry that traditionally talked to customers more than listened to them.

Navigant notes that “the end result of this transformation is a reimagining of how we generate, store, and consume energy in the next 20 years.”

© 2015 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.

(BRK.A), (BRK.B)

The state of Nevada’s Public Utility Commission (PUC) voted 2-1 to reject Switch Communication’s application to leave NV Energy, a subsidiary of Berkshire Hathaway Energy (BHE). Switch is a developer and operator of data center facilities.

Despite the rejection, it looks inevitable that Switch will move to another energy supplier, and it is all just a matter determining the appropriate exit fee.

The PUC had proposed a $27 million exit fee, and Switch asked to only pay $18.5 million.

Casinos Want to Leave Too

Switch Communications is not the only one pushing to leave the utility. Caesars, Wynn Las Vegas, MGM Resorts International, and Las Vegas Sands Corp. are all now planning to purchase their power from another “qualified energy provider,” using the exit provision passed by the Nevada Legislature in 2001.

Heated Accusations from Wynn Las Vegas

In testimony before the PUC, Matt Maddox, president of Wynn Resorts, accused NV Energy of reaping huge profits from Nevada customers and taking the profits back to parent company Berkshire Hathaway. The accusation is inaccurate, at least as to the ultimate destination of any profits, as Berkshire Hathaway lets BHE retain all of its earnings.

A big part of the conflict is related to who will bear the cost of closing the Reid Gardner coal-fired units in Moapa, Nevada. NV Energy has announced it will end its use of coal for electricity generation by 2019. The move is in accordance with Nevada’s Senate Bill 123 of the 2013 session that required NV Energy to close its lower-cost coal-fired generation facility.

The estimated $100 million in plant closing costs will be borne by ratepayers, and the casinos and Switch are hoping to leave before those costs are passed on to consumers.

© 2015 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 performance.

(BRK.A), (BRK.B)

Berkshire Hathaway Energy, which is already a leader in solar energy generation in California and Arizona, is looking to the central U.S. to locate a new solar farm development. The company filed its land acquisition plans with the Midcontinent Independent System Operator (MISO), a Regional Transmission Organization that covers the transfer of energy along the interconnected transmission system in 15 states and the Canadian province of Manitoba.

According to the filing, BHE has acquired a site for solar generation development in MISO’s central region, consisting of 74 individual locations not to exceed 1 megwatt each.

The precise location of the land has not been released.

Currently Berkshire Hathaway Energy, through its subsidiary BHE Renewables, has 1,271 megawatts of owned solar generation.

© 2015 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.