Andrew Bary
Berkshire Hathaway Energy is one of the three most important divisions of Berkshire Hathaway along with its railroad and insurance operations and it could be worth close to $100 billion.
The company is one of the largest utilities in the country with franchises in the Pacific Northwest and Midwest, plus operations in the U.K. It's a leading producer of wind power. It also owns a group of valuable natural-gas pipelines and a top real estate brokerage business, HomeServices of America.
Berkshire Hathaway Energy recently rele ased an annual slide deck running 132 pages on the Berkshire Hathaway website that provides a lot of information on the low-profile company that probably would be a top five utility in the country by market value if it were publicly traded. There is no publicly traded stock in Berkshire Hathaway Energy with Berkshire owning 100% of the business.
Here are some highlights. The company earned $4.1 billion after taxes in 2025, down from $4.3 billion in 2024. It has $54 billion of shareholder equity and $57 billion of debt. It plans to spend about $33 billion on capital expenditures from 2026 to 2028. Revenues were $26 billion in 2025 including $4 billion at its real estate brokerage unit.
Its returns are low relative to public peers with a return on equity of about 7% last year against closer to 12% for Duke Power, NextEra Energy and Southern Co. Its marginally profitable real estate brokerage business is a contributor to its lower returns.
The utility is the only major Berkshire unit to put out an investor presentation. Why? Because the company is a large borrower, and it apparently wants to provide color as well as basic financials like 10-K reports to potential bond buyers.
Berkshire Chairman Warren Buffett has liked the business because it can absorb huge amounts of capital spending with the company, and is typically able to earn a predictable 10-ish% return on invested capital. Buffett, however, has somewhat soured on Berkshire Hathaway Energy because of wildfire litigation losses at the company's PacifiCorp unit in the Pacific Northwest.
Berkshire CEO Greg Abel knows it well, having headed the company for a period before becoming a senior Berkshire executive in 2018.
Berkshire Hathaway Energy offers a model for enhanced financial disclosure for Berkshire's other large businesses -- something the company hasn't been willing to do.
Such a slide deck for Berkshire's BNSF railroad business and its giant insurance operations would be valuable for investors, Barron's has argued.
Greater disclosure would help investors better understand the company and could broaden its ownership base. The Berkshire investment story used to involve Buffett, 95, but he retired as CEO at year-end 2025 (while remaining chairman) and Abel became CEO.
The transition hasn't been a hit so far with investors. Berkshire stock lags behind the S&P 500 this year with a decline of about 4% against a 4% rise in the index, picking up from its underperformance in 2025. The Class A shares are up 0.3% Friday to $714,600, valuing the company at around $1 trillion.
Berkshire Hathaway Energy is the largest operator of wind power in the country and gets close to 50% of its power generation from non-carbon sources and has invested $45 billion in wind, solar and other renewable power. It plans to invest another $5 billion in renewables by 2028. It retains all its earnings, unlike public-traded utilities that pay most of their profits in dividends, giving the company an important advantage over rivals because it needs less outside financing. It gets about a quarter of its generating capacity from coal, with that energy source heading to zero by 2050 as part of a decarbonization effort.
One of the negatives for the company has been wildfire litigation risk at the company's PacifiCorp. subsidiary in the Northwest after fires in its territory in 2020 and 2022.
The slide deck highlights significant spending to prevent future wildfires, with another $1.5 billion of investment through 2028. The company seems more comfortable with its wildfire risk. Losses were $75 million in 2025, down from $1.3 billion in 2023.
Another issue is the impact of reduced federal renewable tax credits on Berkshire Hathaway Energy, which has benefited from large credits in recent years. The deck doesn't specifically address this risk.
The company's financials are complicated and that makes it harder to value the business. Berkshire Hathaway Energy's operating profits last year before taxes were $2.3 billion. Unlike most companies that pay income taxes, the company benefited from $1.8 billion in tax credits (mostly for wind power installation) that resulted in $4.1 billion of net income. Berkshire Hathaway Energy has reaped similar tax benefits in prior years.
How sustainable are those credits and what kind of multiple should be assigned to them in valuing the company? That's tough to say. Public utilities trade for about 20 to 25 times after-tax earnings but don't benefit from such outsize credits. At that 20 to 25 multiple, it would put Berkshire Hathaway Energy's valuation at close to $100 billion.
UBS analyst Brian Meredith values the business at $98 billion, while KBW's Meyer Shields put it at $79 billion, and investor Chris Bloomstran of Semper Augustus Investments at about $90 billion.
One marker. In 2024, Berkshire Hathaway bought an 8% stake in Berkshire Hathaway Energy from the estate of Walter Scott, a former Berkshire director, for $3.9 billion, which valued the business at just $49 billion, down from about $87 billion in mid 2022 when Berkshire bought a 1% stake from Abel.
Buffett was asked about the seemingly low price of the Scott purchase at the Berkshire annual meeting last May and he cited the wildfire situation and the growing legal risk faced by utilities.
"Berkshire Hathaway Energy is worth considerably less money than it was two years ago based on societal factors and that happens in some of our businesses. It certainly happened in our textile business."
" The public utility business is not as good as it was a couple of years ago. And if anybody doesn't believe that they can look at Hawaiian Electric and they can look at (Southern California) Edison in the current wildfires situation in California." Buffett's view seems overly pessimistic as wildfire risk seems to be fading.
Analysts are taking a more upbeat view of the business. Big public utilities trade for at least twice book and such a multiple would suggest a value of around $100 billion for Berkshire Hathaway Energy.
"We haven't shaved our valuation for potential legal liabilities at PacifiCorp in the letter but it's a real risk," Bloomstran wrote in a report earlier this year on Berkshire Hathaway.
The value of Berkshire Hathaway Energy is debatable, but it remains one of the largest and better units within Berkshire Hathaway. Maybe Abel will offer an opinion at Berkshire's annual meeting on May 2.
Write to Andrew Bary at andrew.bary@barrons.com
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(END) Dow Jones Newswires
April 17, 2026 16:01 ET (20:01 GMT)
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