WILDFIRESWho Pays for Wildfire Damage? In the West, Utilities Are Shifting the Risk to Customers
Utah laws cap wildfire damages and let utilities pass the cost onto customers. Utility lobbyists are pushing the model in other states.
Every spring, investors flock to Omaha, Nebraska, for Berkshire Hathaway’s annual shareholder meeting, where Warren Buffett holds court. Insiders call it “Woodstock for Capitalists,” and CNBC covers it with the fervor of Fox Sports on Super Bowl Sunday.
Last year’s meeting held particular weight. Investors were watching closely to see if Buffett, the company’s 93-year-old CEO, would name Greg Abel, Berkshire’s vice chairman, as his successor, and how the company would weather the billions in wildfire lawsuits threatening its energy utilities. Buffett dodged the succession question, but the meeting revealed something just as consequential: the company’s strategy to avoid wildfire liability.
Two months earlier, the Utah legislature had passed a law allowing utilities to charge their own customers to build a fund for future fire damages. The state also has a 2020 law on the books that capped the amount fire victims could sue utilities for in damages. Combined, the two laws mean that if homes in Utah burn down due to a power company’s faulty electrical line, the financial damages residents can seek are limited — and they may already have been paying into the fund that covers them. For utilities, the result is reduced costs.
At the shareholder meeting, Abel singled out Utah as “the gold standard” of utility protection — a model he urged other states to adopt. “As we go forward,” he told the crowd, “we need both legislative and regulatory reform.”
Berkshire Hathaway Energy, or BHE, Buffett’s $100 billion energy arm, operates a vast power grid that stretches across the West. BHE subsidiaries such as Rocky Mountain Power and PacifiCorp are responsible for maintaining more than 17,000 miles of transmission lines that serve roughly 10 million customers across 10 states. In recent years, BHE has been slapped with lawsuits in Oregon worth nearly $10 billion for fires caused by its faulty equipment. For BHE, the Utah laws were a significant win, shielding the company from that kind of liability in at least one state. Across the West, BHE-owned utilities and their lobbyists are now trying to replicate that success, securing laws that both cap wildfire damages and shift costs onto customers.
