No. of Recommendations: 12
They discussed the lawsuits involving BHE as much as they could at the annual meeting. Gregg Abel stated about that one, that they always kept power on in the face of wildfires in the past. They reasoned that having power to hospitals and firehouses took priority over keeping the power off to prevent accidentally sparking new ones, and indeed that's how they always operated the network.
IMO, this lawsuit goes a step further, asking not only that power be turned off when a wildfire is active, but that it be turned off when conditions exist for wildfires to occur (high wind, dry forests). Surely we can't expect power providers to turn off power for weeks at a time. But if the alternative is we burry all the high-voltage power lines, that level of infrastructure investment requires signoff of the utility regulators to get rate payers to fund it.
There's an argument to be made saying people in wildfire-prone areas have been getting electricity rates subsidized by a federal government that's willing to step in to take the loss when the network sparks wildfires (although the conditions under which an electric network *can* spark wildfires are the fault of many). This has allowed electric grid companies to operate with smaller right of ways, pushing more power through power lines, and with power above ground, all contributing to lower capital costs. These new lawsuits show at the minimum the reluctance of the federal government to be the backstop of losses.
So I think we're left with few options:
Provide less power part of the year, including turning off power during active wildfires, and just when we have high winds & dry conditions
Raise rates to fortify the grid, including expanding Right-of-Ways, and burying lines (if utility regulators agree).
Raise rates to cover insurance coverage for catastrophic losses due to wildfires.
It's not a nice picture, certainly not one where Berkshire can feel confident they can invest a few billion in improvements and obtain a reasonable rate of return.
