When gushing about the attractiveness of capital investments into Utilities, Buffett always added one small qualifier, “…as long as the regulators…..”.

The mundane aspect of it was around rate setting, permitting etc. But this tail aspect of regulation is playing out large with these lawsuits. “Keep the power on” has been the underpinning of the regulatory compact for 100 years. The lawsuits are essentially the polar opposite of. “Why didn’t you shut it down “. BHE / Pacificorp has been guillotined with the state regulators not playing their part in recognizing this fundamental compact.

Absent regulatory teaming, utility investments go from “how to stay rich” to “too hard to touch”. Akin to entering into insurance contracts in countries where the legal system is not mature enough to handle claim disputes.

I would like to hear from Greg on one nagging question unanswered in last year’s meeting. Did Pacificorp/BHE do their due diligence on the liability, back when the original contract was inked. Like in 1990’s, 80’s? That was implied by Buffett last year. Selling off the Washington state assets suggests that it may not have been. Sam Walton learned early in Walmart’s history that real estate contracts mattered. They got burned on poorly executed leases. Walton shunned all leases since.

“Better to cut your losses. And quickly.”. has been the approach Buffett has passed down to Greg, it appears to me.