Berkshire Hathaway is a public company that owns several utilities. Their proposal illustrates the difference between a company taking risks versus a utility.
Berkshire is proposing the Texas Grid operator (utility oversight company) build a gas-fired power plant that would be weather normalized and fixed to support a large portion of Texas’ energy demands. Berkshire is proposing to spend $8.3 billion to build this plant.
The cost: Berkshire would earn what a Texas utility earns on investments which is 9.3%.
So, Berkshire like any utility in Texas that receives regulatory approval, earns a return regardless of whether what they build works.
Berkshire as a public company takes risks building and operating businesses such as Dairy Queen, Burlington Northern Railroad, or Sherwin-Williams. Any investment in these businesses comes with no guaranteed return.
EVERY utility makes money by spending money to provide service. The Texas Grid operator will undoubtedly not accept this proposal but, it does show the difference between private businesses and utilities.
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