NEW YORK (Reuters) – Berkshire Hathaway (NYSE:), the conglomerate led by Warren Buffett, will fight all lawsuits brought against its utility business over wildfires because the cases are “meritless,” an executive said on Saturday .
Greg Abel, widely regarded as Buffett’s successor and future Berkshire chief executive, said at Berkshire’s annual shareholder meeting that “all litigation will be contested” against PacifiCorp. [PPWLO.PK].
Last month, 1,000 victims filed new $30 billion lawsuits against PacifiCorp, blaming it for starting the 2020 wildfires in Oregon. The claim comes on top of $825 million PacifiCorp has already paid or owed in claims related to other wildfire-related claims.
Berkshire’s utilities business became a potential drag on the conglomerate’s earnings last year. Earlier this year, Buffett said his failure to anticipate adverse developments in the utilities business was a “costly mistake.”
“As far as wildfires go, this is a major issue because for the first time there’s a lot of discussion around one of our utilities” that has “significant losses associated with wildfires,” Abel said.
Utilities can reduce the risk of wildfires by insulating wires to reduce the threat of sparks, trimming or cutting down trees that might come into contact with power equipment, burying power lines underground and temporarily cutting off power.
But Abel said temporary power outages during hurricanes or wildfires were not on the minds of utility employees and required Berkshire to make a “fundamental culture change.”
“Our employees have worked incredibly hard to maintain power day after day during storms,” Abel said. “Unfortunately, during the 2020 fires, the instincts were not to turn off the power. The instinct was to leave the power on so the hospital fire stations could respond.”
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Utah lawmakers in March allowed large utilities to charge customers additional fees to create wildfire funds and also limited liability for some claims, a move Abel called the “gold standard.”
Abel said Berkshire has begun asking employees to turn off power during wildfires, updated its system so it can be done quickly, and continues to invest in the business to reduce wildfire risks.
But Abel said Berkshire will be “very disciplined” about additional investments in utilities. “As Warren said, we don’t want to throw good capital after bad.”