Buffett's Power Unit Targets Renewables for Acquisitions

Tuesday, 13 Nov 2012 01:31 PM

 

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MidAmerican Energy Holdings Co., the power provider owned by Warren Buffett’s Berkshire Hathaway Inc., is targeting renewable energy for acquisitions, Chief Financial Officer Patrick Goodman said.

“We believe renewables is the better investment right now” because utilities are too expensive, MidAmerican’s Goodman said in an interview Tuesday at an Edison Electric Institute conference in Phoenix. “As a cash buyer, we will be looking at utilities if pricing comes in a bit.”

MidAmerican has sought opportunities to reinvest its cash and highlighted that it has more funds available to service debt and build its business because it doesn’t pay a dividend. The power provider also has access to capital from Omaha, Nebraska-based Berkshire, which holds a 90 percent stake.

MidAmerican has been buying wind and solar projects, including the $2.4 billion 550-megawatt Topaz Solar Farm in California. The company formed a new unit in January to support its investments in renewable energy. The acquisitions have boosted the proportion of MidAmerican’s energy generated from wind, hydroelectric, solar, nuclear and geothermal to 31 percent at the end of September from 19 percent at the end of 2006, according to a regulatory filing last week.

Chief Executive Officer Greg Abel, 50, last month struck a deal with TransAlta Corp. to fund half the cost of natural-gas fuel power plants built or bought in Canada, where the companies said almost $200 billion in new investment is needed during the next 20 years. The deal will expand MidAmerican’s North American operations beyond U.S. utility and natural gas pipeline units.

Buffett, the world’s fourth-richest person, has said that regulated businesses like the utilities have earnings power even under adverse economic conditions and can provide fair returns on capital as long as they invest in infrastructure. MidAmerican sells electricity to 6.3 million customers and operates in states including Iowa, Oregon and Utah.

Owning utilities is “not a way to get rich,” Buffett, 82, said at a meeting of U.S. state regulators in 2006. “It’s a way to stay rich.”

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