Berkshire Hathaway, under the leadership of Warren Buffett, is set to contest all legal challenges brought against its utility business by wildfire victims.
As reported by Reuters, Greg Abel, projected to be Buffett’s successor, emphasized at Berkshire’s annual shareholder meeting that the lawsuits are without merit and the company will respond to each one.
Abel highlighted the severity of the situation, noting that PacifiCorp, a part of Berkshire’s portfolio, faces $30 billion in new claims filed last month by approximately a thousand victims of the Oregon wildfires in 2020.
This comes in addition to $825 million that the utility has already disbursed or committed to various claims related to earlier wildfires.
The utility sector within Berkshire Hathaway has recently been identified as a potential burden on the overall earnings of the conglomerate.
Warren Buffett admitted earlier in the year that failing to foresee negative developments in this area was a costly error.
Abel outlined the significant challenges posed by wildfires, marking it as a unique issue that has sparked considerable discussion among stakeholders about the financial losses involved.
He detailed preventative measures that utilities can adopt, such as insulating wires, managing vegetation, burying power lines, and implementing power shutoffs during critical conditions to mitigate wildfire risks.
In response to past mistakes, Berkshire is actively working to shift its operational culture.
Abel admitted that during the 2020 wildfires, the instinct among utility employees was to keep the power on, even under dangerous conditions, to ensure that critical services like hospitals and fire stations remained operational.
However, he acknowledged the need for a fundamental change in approach.
As reported by Reuters, recent legislation in Utah now permits large utilities to impose surcharges to fund wildfire prevention and caps certain liabilities.
Abel praised these measures as the “gold standard” and confirmed that Berkshire has begun instructing employees to shut off power during wildfire threats to prevent future incidents.
