Berkshire Hathaway Praises Utah Law Letting Utilities Limit Payouts From Fires Their Defective Equipment Causes

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Two months earlier, the Utah legislature had passed a law allowing utilities to charge their own customers to build a fund for future fire damages. The state also has a 2020 law on the books that capped the amount fire victims could sue utilities for in damages. Combined, the two laws mean that if homes in Utah burn down due to a power company’s faulty electrical line, the financial damages residents can seek are limited — and they may already have been paying into the fund that covers them. For utilities, the result is reduced costs. At the shareholder meeting, (Ed. - Berkshire Vice-Chairman Greg) Abel singled out Utah as “the gold standard” of utility protection — a model he urged other states to adopt. “As we go forward,” he told the crowd, “we need both legislative and regulatory reform.”

Berkshire Hathaway Energy, or BHE, Buffett’s $100 billion energy arm, operates a vast power grid that stretches across the West. BHE subsidiaries such as Rocky Mountain Power and PacifiCorp are responsible for maintaining more than 17,000 miles of transmission lines that serve roughly 10 million customers across 10 states. In recent years, BHE has been slapped with lawsuits in Oregon worth nearly $10 billion for fires caused by its faulty equipment. For BHE, the Utah laws were a significant win, shielding the company from that kind of liability in at least one state. Across the West, BHE-owned utilities and their lobbyists are now trying to replicate that success, securing laws that both cap wildfire damages and shift costs onto customers.

“It’s infuriating to me that they are creating these situations,” said Stephanie Chase, a research and communications manager at the Energy & Policy Institute and a former consumer advocate in the Washington state Attorney General’s Office. “They’re not doing a good job at maintaining their power lines. Then when they start fires, they don’t want to pay for them.” BHE’s infrastructure is aging, and maintaining it is expensive. Climate-proofing measures, like running power lines underground, can easily cost more than $1 million per mile, according to the Institute for Energy Research, and would put the cost of sending all BHE-owned equipment into the ground at well over $17 billion.

Other resilience measures, such as trimming branches that grow over power lines and inspecting equipment in rural areas, are also expensive. “Vegetation management is not one of the things that they receive a return on investment,” said Chase. State regulatory agencies typically set utility prices using a formula known as the rate base, which excludes routine maintenance like managing vegetation. By contrast, utilities earn a return when investing in new infrastructure, Chase added. “Utility companies have a much bigger incentive because they’re receiving a return on equity on any funds that they put into capital expenditures: building a new plant, building construction, building new lines,” she said. BHE did not respond to multiple requests for comment. Earlier this summer, the Wyoming legislature passed a law that limits damages that can be awarded to victims of a utility-caused fire, so long as the company followed its own wildfire plan. In July, Idaho also enacted a similar law, shielding utilities from negligence if they prove they adhered to their wildfire plan. According to state regulatory filings, at least one representative for Rocky Mountain Power and other utilities operating in the state lobbied lawmakers in March and April to get the law passed.

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https://grist.org/wildfires/who-pays-for-wildfire-damage-in-the-west-utilities-are-shifting-the-risk-to-customers/