US market | Berkshire-owned PacifiCorp is selling Washington assets to Portland General Electric for $1.9 billion for liquidity reasons

PacifiCorp, a utility owned by Berkshire Hathaway, is selling assets and infrastructure for wind energy generation and distribution, natural gas in central and southern Washington state to Portland General Electric for $1.9 billion, citing liquidity concerns in the fight against wildfires in Oregon. The transaction announced Tuesday includes the Chehalis natural gas power plant, the Goodnoe Hills wind facility, the Marengo I and II wind facilities and 7,000 kilometers of transmission and distribution lines. PGE will add PacifiCorp’s 140,000 customers in Washington state, covering approximately 1,700 square miles. Manulife Investment Management will take a 49% stake in Washington’s utility sector, PGE said. The transaction could take at least a year to close, pending reviews by federal and state regulators. PGE and PacifiCorp are based in Portland, Oregon. PacifiCorp has said it could face strained liquidity due to lawsuits from thousands of Oregonians who blamed the company for starting four wildfires in September 2020 by negligently shutting down power lines during a storm. Claims for damages could reach $52 billion, PacifiCorp says, but are likely to be lower. The trials could last until 2028. PacifiCorp has asked an Oregon appeals court to overturn a class action and exclude liability for the emotional distress of fire victims.

PACIFICORP FACE WITH ‘EXTRAORDINARY PRESSURE’

In announcing the asset sale, PacifiCorp said “diverging policies” among the six western U.S. states it serves have created “extraordinary pressures,” which have affected the country’s financial stability, liquidity and creditworthiness. It’s rare for Berkshire or its operating units to sell a major company or group of assets. Greg Abel replaced Warren Buffett as CEO of the Omaha, Nebraska-based conglomerate on January 1. Abel previously led PacifiCorp’s direct parent company, Berkshire Hathaway Energy, for approximately a decade. “PacifiCorp faces a complex set of financial and regulatory pressures,” the utility said in a statement. “The sale is an important step in strengthening the company’s overall position and simplifying its operations.”

The sale does not include PacifiCorp’s hydroelectric power plants in Washington. As demand for electricity increases among industrial customers and data centers, utilities are looking for additional generation and transmission assets to support load growth.

Maria Pope, CEO of PGE, said on a conference call that PacifiCorp’s assets are “a valuable mix of natural gas and wind resources that provide safe, reliable and affordable energy.”

PGE also posted fourth-quarter adjusted earnings of $53 million, or 47 cents per share. Analysts had expected an average of 63 cents per share, according to LSEG.