I took a closer look at BHE to see where the issues with earnings might be and the interplay with weather.

Pacific Power - utility rates in Oregon and California under pressure. Wildfire risk going forward, burying transmission lines (cost is exorbitant).

MidAmerican Energy - utility ROE/rates in Illinois under pressure. utilitydive.com - Moodys downgrades comed morgan stanley exelon ameren icc rate case

NV Energy - potential wildfire risk but rates are stable.

Northern Powergrid - UK electric delivery - rates are stable.

Altalink - Alberta Canada tranmission/delivery - rates are stable. Wildfire risk.

Northern, BHE GT&S, Kern River - gas pipelines - rate stable - FERC regulation a blessing maybe?

BHE Renewables - power generation is fine. Renewable tax credits, and plenty of utilities willing to take electricity.

BHE Transmission - not sure where these interstate transmission projects are located but suspect its Western US. So definite wildfire risk.

Homeservices - 11 federal lawsuits filed on broker commissions etc. Big liability of $5.4B in Burnett case. Other cases pending. Could judgements permanently impair earnings potential of real estate business? Either way, commissions are likely coming down and many RE agents will leave the business. This may help the brokerage overall though.

Climate factors - El Nino has been good to the western US re rainfall and snow pack. 2024 wildfire risk is drastically reduced.

Post script - OTOH, weather bloggers (see below) have already noted that the El Nino pattern could end by late spring 2024, and move into La Nina. La Nina pattern usually means more Atlantic hurricane activity, so the improvement in P/C insurance underwriting could change negatively in 2024, 2025, and as long as La Nina persists. This also intensifies drought in Western states, so wildfire risk probably rises in 2025 and later.

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