Investors in California utilities, particularly PCG, have been thinking about wildfires a lot lately. People keep discussing the increase in fires over the last few decades, and that utilities could be at risk for some of the costs of the fires if their equipment is involved in the start of the fire, even if the equipment was maintained and operated in a manner that is considered best practice. A short article in Businessweek (see here) got me thinking that some changes are going to have to come to how wildfire liabilities are distributed, because things could get much worse. According to the article 10 million acres burned in the US in 2017, but this is far less than burned earlier this century. The chart in the article shows over 50 million acres burned each year in 1930 and 1931. (Note that the chart says that the reporting process wasn’t standardized until 1983, but even if the old numbers need some downward adjustment, those years are way higher than today.) It appears that the last half of the 20th century could be the outlier. With increased development throughout the west, there is no way a utility could pay for the potential damage caused by increased fires. We need utilities, and society will find to avoid their financial ruin from a threat that has a risk of getting worse in the future.
I've decided to stop publishing reports. It just takes more time than I thought it would, and there are so many other things to do. Hopefully there will be the occasional blog post, but I'm going to put more focus on my work with Boiling Point Resources. Thanks to the people who read the pieceRead More
This week's Barron's showed utilities some love, with two of them, Sempra (SRE) and NextEra Energy (NEE), discussed in the cover article on dividend paying stocks that could be used for some defensive positioning. (See article here.) The article says that if the Fed is not going to raise rates iRead More
Page 46 of this week's issue of Businessweek had a large article on PG&E. (See here) Lots of good information on the company's history and problems. There is one nuance of the situation that the article seemed to miss. The article discusses the work PG&E has done with renewables, and aRead More
I finally got the second issue of BHUR out the door today. This one discuses items in Warren Buffet's annual letter that relate to Berkshire's utility business, as well as a review of the Berkshire 10-k. I also take a look at Electricity North West, a UK utility up for sale that is adjacent to BRead More
This week Garnet Research releases a new monthly newsletter: Berkshire Hathaway Utility Review. The utility business at Berkshire Hathaway (BRK) has grown considerably since BRK acquired MidAmerican Energy in 2000. Warren Buffet likes the stable regulated returns that utilities offer. This newRead More
Today's blog from RBN Energy discussed the outlook for natural gas at the end of this winter. (See post here.) A lot of the issues in today's RBN blog are related to the natural gas discussion I had in my last SeekingAlpha article. (See November 2018 Utility Review) The RBN article helps showRead More