NEW YORK (Reuters) – Berkshire Hathaway (NYSE:), the conglomerate led by Warren Buffett, will fight all lawsuits filed against its utilities business due to wildfires as the cases are “baseless,” a spokesman said on Saturday. top executive.
Greg Abel, widely credited as Buffett's successor and future Berkshire CEO, said at Berkshire's annual shareholder meeting that “all litigation will be contested” regarding PacifiCorp (PPWLO.PK).
One thousand victims filed $30 billion in new claims against PacifiCorp last month, blaming it for causing wildfires in Oregon in 2020. The lawsuit adds to the $825 million PacifiCorp has already paid or owes in claims due to other wildfire-related lawsuits. .
Berkshire's utilities business emerged as a potential drag on the conglomerate's earnings over the past year. Buffett said earlier this year that his failure to anticipate adverse developments in the utilities business was a “costly mistake.”
“When we get to the wildfires, it's been a substantial challenge because it's the first time there's been a lot of discussion about one of our utilities” experiencing “significant losses associated with the wildfires,” Abel said.
Utilities can reduce the risk of wildfires by insulating wires to reduce the threat of sparks, pruning or felling trees that could come into contact with electrical equipment, burying transmission lines underground, and temporarily shutting off power.
But Abel said temporarily shutting off power during storms or wildfires was not on the minds of utility employees and required Berkshire to “fundamentally change the culture.”
“Our employees worked incredibly hard to keep the power on day after day during the storms,” Abel said. “Unfortunately, during the 2020 fires, the instinct was not to turn off the power. The instinct was to keep the power on so the hospital fire stations would continue to respond.”
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In March, Utah lawmakers allowed large utilities to charge surcharges to customers to establish wildfire funds and limited liability on some claims, a measure Abel described as the “gold standard.”
Abel said Berkshire has started telling employees to turn off power during wildfires, has updated its system so it can do so quickly, and also continues to invest in the business to reduce wildfire risks.
But Abel said Berkshire will be “very disciplined” in making additional investments in utilities. “As Warren said, we don't want to throw good capital after bad capital.”
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