There is upside. The thesis of this investment for a company the size of Berkshire is the ability to deploy large amounts of capital at reasonable returns - returns that are set and protected by regulators. The challenge so far is getting the regulators on board for large projects, especially as they interact with each other across state borders.

Berkshire proposed a solution to Texas’ wintertime cold snap energy crisis for example. Being willing to sign up for penalties if they missed deadlines and everything. But Texas regulators couldn’t stretch their market to allow reasonable payment for any type of standby capacity.

Lately they’ve been dealing with fallout from keeping power lines active during dry, windy-weather events and active wildfires. This was standard operating procedure prior to these events. Regulators looking to make Berkshire Energy the insurer of last resort for underinsured homeowners in fire prone areas adds a layer of liability that prevents a lot of new infrastructure investments. If they can get regulators to acknowledge that these risks belong to others, or that efforts to weather-proof the infrastructure can be repaid by rate payers, than they can move ahead with those investments.

Berkshire Hathaway FAQ

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