Buffett’s Oregon Fire Costs Grow as He Sours on Utilities
Berkshire Hathaway Inc.’s PacifiCorp was hit with at least another $29.3 million in damages for Oregon’s 2020 Labor Day fires, the latest blow for the company after Chairman Warren Buffett recently warned that he no longer views investments in western US utilities as safe.
Tuesday’s verdict in Portland state court was one of the “mini-trials” designed to assess how much the largest grid operator in the western US ultimately will have to pay owners of about 2,500 properties destroyed in a series of blazes blamed on power lines knocked down by strong winds. The award for actual damages and emotional distress to 10 fire victims follows about $175 million previously ordered for 26 victims.
Attorneys for the victims said Tuesday’s award could grow to more than $42 million after calculating punitive damages and doubling economic damages to reflect an earlier jury verdict.
The costs keep piling up for PacifiCorp. Berkshire recently disclosed in a regulatory filing that it booked a $1.9 billion probable loss from wildfires in 2023 and faces claims in Oregon and California of about $8 billion. That includes demands from state and US government agencies totaling more than $1 billion for various firefighting and cleanup costs.
In his annual letter to shareholders, Buffett called Berkshire Hathaway Energy, which includes PacifiCorp, an “even more severe earnings disappointment” than the conglomerate’s railway business.
“It will be many years until we know the final tally from BHE’s forest-fire losses and can intelligently make decisions about the desirability of future investments in vulnerable western states,” Buffett wrote in the letter.
Taking Chance
While destructive wildfires are now an almost routine part of summer in the American West, PacifiCorp’s decision to take its chances with a jury last year marked the first time that a lawsuit over large-scale devastation blamed on a utility’s equipment went to a trial.
But the company was found liable for failing to heed weather warnings and shut off electricity in its service areas ahead of a wind storm that toppled power lines. PacifiCorp, which has settled some claims over the 2020 fires and still faces others, has said it’s confident the liability verdict will be overturned on appeal.
“Three different juries have now spoken, and as much as the executives at PacifiCorp want to bury their heads in the sand, each jury has recognized the catastrophic loss that PacifiCorp’s actions have caused the survivors of its fires,” the plaintiffs’ attorney Nicholas Rosinia said in a statement.
In a statement after the verdict, PacifiCorp said it “remains committed to settling all reasonable claims for actual damages under Oregon law.”
“For utilities, there is an ominous risk in making future investments in regions where they become the de facto insurers of last resort in a more frequent extreme weather environment,” the company said.
PG&E Corp., California’s largest utility, avoided going to trial over a series of catastrophic fires in the northern part of the state, instead filing for bankruptcy and settling victim claims in 2020 for $13.5 billion.
Meanwhile, similar suits over mass destruction are pending against Hawaiian Electric Industries Inc. over a fire last year that razed the town of Lahaina on the island of Maui and against Xcel Energy Inc. over separate blazes in 2021 in Colorado and this month in the panhandle of Texas.
Top photo: A PacifiCorp power plant outside Huntington, Utah.