Berkshire Hathaway Energy Company Expands at Fastest Pace



Diversified portfolio

Berkshire Hathaway (BRK-B) manages its energy businesses through the Berkshire Hathaway Energy Company, or BHE, in which it owns a 89.9% stake. BHE’s utility interests in the US currently consist of PacifiCorp, MidAmerican Energy Company, and NV Energy, which was acquired in December 2013. BHE also operates a diversified portfolio of independent power projects, and the second-largest residential real estate brokerage firm and franchise network in the US. It also owns two domestic regulated interstate natural gas pipeline companies.

Outside the US, BHE operates two regulated electricity distribution businesses in the UK known as Northern Powergrid.

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Berkshire Hathaway competes with asset managers such as Blackstone (BX), BlackRock (BLK), Goldman Sachs (GS), and Morgan Stanley (MS). Together these companies make up 5.93% of the Financial Select Sector SPDR Fund (XLF). Berkshire and its competitors are also part of the iShares Core S&P 500 ETF (IVV).

Lower impact of oil

BHE acquired AltaLink in December 2014. AltaLink operates a regulated electricity transmission-only business in Canada. BHE sets up the price after including the return on capital on top of operating costs subject to regulatory approvals.

The division reported strong revenue growth in 2014. Revenues were up by 38% to $17.6 billion. NV Energy, acquired in December 2013, contributed $3 billion toward revenues. MidAmerican Energy Company also demonstrated growth, backed by higher volumes of natural gas in the winter season. Overall, the division’s net earnings expanded by 28% to $1.9 billion in the current year.

Berkshire Hathaway has less exposure to refining and oil extraction in its portfolio. As a result, the company hasn’t seen too much of an impact on its earnings stemming from falling oil prices in 2014.


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