US government may sue PacifiCorp, a Warren Buffett utility, for nearly $1B in wildfire costs

The US government is threatening to sue PacifiCorp, a unit of Warren Buffett’s Berkshire Hathaway, to recover nearly $1 billion in costs related to the 2020 wildfires in Southern Oregon and Northern California, although the company is trying to negotiate about a settlement.

The potential lawsuits were disclosed Monday in an annual report filed by PacifiCorp’s Iowa-based parent company, Berkshire Hathaway Energy, two days after Buffett lamented disappointing results at the conglomerate’s utilities division in his annual letter to Berkshire Hathaway shareholders. This new liability comes after the utility already agreed to pay hundreds of millions of dollars in lawsuits related to the fires.

In its annual report, Berkshire Hathaway Energy says the U.S. Department of Justice told the company it is seeking $625 million in firefighting and cleanup costs related to the Archie Creek and Susan Creek fires in September 2020. The Justice Department Oregon said it is also seeking $109 million in damages related to these fires.

In addition, the US Forest Service has asked PacfiCorp to pay $356 million for firefighting costs and damages related to the Slater Fire that started in California but also crossed the border into Oregon.

The fires were among the worst natural disasters in Oregon history. They killed nine people, burned more than 4,856 square kilometers and destroyed more than 5,000 homes and other structures.

The lawsuits in Oregon allege PacifiCorp negligently failed to shut off power to its 600,000 customers during a 2020 Labor Day weekend storm, despite warnings from state leaders and top fire officials, and that its power lines caused multiple fires.

Representatives for PacifiCorp and Berkshire Hathaway Energy declined to comment on the new commitments. The Justice Department did not immediately respond to a request for comment on the potential lawsuits.

Omaha, Nebraska-based Berkshire estimates that its utilities could face claims of at least $8 billion in all the wildfire lawsuits already filed in Oregon and California, although damages could double or even triple in some of those cases and some of the lawsuits don’t. state a dollar amount.

These costs, combined with the uncertain regulatory environment in Western states where wildfires are more common, make it more difficult for utilities like PacifiCorp to decide when it makes sense to invest in major new power plants and transmission lines.

“It will be many years before we know the final figure for BHE’s (Berkshire Hathaway Energy) wildfire losses and can make intelligent decisions about the advisability of future investments in vulnerable Western states,” Buffett said in his letter. “It remains to be seen whether the regulatory environment will change elsewhere.”

Buffett said that in extreme cases, such as Pacific Gas and Electric in California or Hawaiian Electric, utilities could go bankrupt and the country may have to decide whether to turn to public power if private investors are no longer willing to take the risks associated with the utility sector. .