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Berkshire Hathaway Energy Company

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About Berkshire Hathaway Energy Company

Berkshire Hathaway Energy (BHE), a subsidiary of Berkshire Hathaway, comprises regulated energy businesses that generate, transmit, store, distribute, and supply electricity and natural gas to some 12 million customers in the US (West and Midwest), the UK, and Canada. A major player in the US brokerage industry, BHE also manages the second-largest residential real estate firm in the country. BHE's energy businesses report some 31,200 MWs of collective generation capacity and 33,000 miles of transmission lines. The company generates most of its power from natural gas, coal, and wind resources but a small amount also comes from solar, hydroelectric, nuclear, and geothermal sources.

Operations

BHE reports eight business segments. 

PacifiCorp is BHE's biggest business. Collecting 25% of the holding company's annual revenue, PacifiCorp supplies around 63,400 GWh of regulated electricity to 1.9 million retail customers in six western states, primarily Utah. HomeServices consists of separate brokerage, mortgage, and franchise businesses. This segment brings in 20% of BHE revenue. 

MidAmerican Funding/Energy (15% of sales) sells electricity and natural gas to some 1.6 million customers in four US Midwestern states, mostly Iowa. Through its ownership of Nevada Power and Sierra Pacific, subsidiary NV Energy (another 15%) serves 1.1 million retail electric and natural gas customers in Nevada.  

The four other BHE businesses collectively account for less than 25% of annual sales. 

Northern Powergrid sells electricity to 3.9 million UK customers. Northern Natural Gas (the largest US pipeline system) and Kern River pipeline companies make up the BHE Pipeline Group, which primarily serves the Midwestern states. BHE Transmissions manages regulated electric business in Alberta through Altalink and holds interests in two transmission joint ventures in the US. Lastly, clean power projects in the US and Philippines (4,650 MW owned capacity) are reported under BHE Renewables. 

Geographic Reach

Headquartered in Des Moines, Iowa, BHE serves electricity and natural gas to some 20 US states, primarily in the West and Midwest. It also serves electricity in customers in the UK and Alberta, Canada. A substantial portion of BHE's customer base comprises customers from the commercial, industrial, and agricultural sectors. The company also has some clean energy assets in the Philippines.    

Sales and Marketing

BHE provides electricity and natural gas services to residential, commercial, and industrial customers. The company serves some 18 million electricity and natural gas customers spread across some 20 US states, northern England and Alberta. BHE brokerages owned by HomeServices comprise more than 42,000 real estate agents, 880 offices in 30 states, and about 50 brand names.

Financial Performance

Revenue at BHE increased 6% in 2018 to $19.7 billion, from $18.6 billion posted in 2017. Growth came primarily from a $771 million increase in sales from HomeServices, which mostly came about inorganically through acquisitions. This was aided by roughly $210 million increase in revenue from each of the MidAmerican Funding (primarily due to an energy adjustment clause leading to higher retail revenue) and BHE Pipelines (higher volumes and rates) segments. 

Net income in 2018 decreased $302 million to $2.5 billion, mostly from a $383 million loss on the company's security investments, partially offset by a $134 million increase in income tax gain from the 2017 federal tax reform. BHE Renewables saw net income decrease by $535 million due to reductions in deferred income tax liabilities.

The company's cash and cash equivalents fell by $400 million, ending 2018 with $883 million on hand. Cash from operations generated $6.7 billion, while cash from investing used $6.9 billion (including $6.2 billion on CAPEX). Financing activities further used $174 million. 

Strategy

Berkshire Hathaway Energy uses its diverse portfolio of companies to ride out downturns in electricity business with those in housing. A player in US renewable energy market, the company is also trying to dramatically boost its position in wind and solar power.

The company has spent $1.2 billion in the last two years to boost its real estate properties across the US, which may expose the company to losses as the housing market is predicted to slow in 2019. To reduce its operating costs, in January 2018, BHE announced the signing of an agreement (with Amazon and JP Morgan) to form a healthcare company for their US employees. The healthcare company will look for ways to reduce medical and insurance costs. 

Mergers and Acquisitions

In 2018, BHE completed various acquisitions totaling $106 million, primarily related to residential real estate brokerage businesses. The company's HomeServices segment acquired the remaining 33.3% interest in a real estate brokerage franchise business from a non-controlling interest member for $131 million.

In 2017, the company acquired $1.1 billion worth of residential real estate brokerage businesses.

Company Background

BHE was initially incorporated in 1971 as California Energy Company, Inc in Delaware. Through a merger transaction in 1999, it was reincorporated in Iowa under the name MidAmerican Energy Holdings Company. In 2014, the business changed its name to Berkshire Hathaway Energy Company.

Berkshire Hathaway Energy Company

666 GRAND AVE STE 500
Des Moines, IA 50309-2511
Phone: 1 (515) 242-4300

Stats

Employer Type: Privately Owned
Chairman, President and CEO: Gregory E. Abel
EVP and General Counsel and Corporate Secretary: Douglas L. Anderson
EVP and CFO: Patrick J. Goodman
Employees (This Location): 119
Employees (All Locations): 23,000

Major Office Locations

Des Moines, IA