BUFFETT BUYING NEW ENERGY

Buffett's MidAmerican sets sights on renewables, midstream M&A by summer

Abby Gruen, April 23, 2012 (SNL Financial)

“MidAmerican Energy Holdings Co., which has been on a renewable energy asset buying spree in the past six months, is on the prowl to buy more clean energy projects, as well as natural gas pipelines, by the summer of 2012.

“With expiring federal subsidies hurting wind and solar developers such as First Solar Inc., which sold its 550-MW Topaz Wind Farm project to MidAmerican in February, and troubles in the shale patch from low prices stressing natural gas pipeline owners such as Chesapeake Energy Corp., Warren Buffett's utility is ready with cash to make deals at the right price…[S]everal new deal announcements could be imminent…”

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”Backed by $2 billion in equity support from its parent, Berkshire Hathaway Inc., the generation and distribution powerhouse with sprawling networks of assets, mostly west of the Mississippi River, is looking to expand through mergers and acquisitions. Unique among its peers, the private power company doesn't pay dividends, so it has more flexibility to enter, and exit, the market opportunistically without worrying about pushback from shareholders. The company is also more willing to stretch its balance sheet in the near term for assets it plans to hold long term…

“…[Executives say] Buffett…is very committed to growing MidAmerican…While MidAmerican continues to look at buying utilities, it will remain extremely patient’ for now, because many are overvalued…Pepco Holdings Inc...[and] Oncor Electric Delivery Co. LLC. [have been mentioned as acquisitions]…Looking to expand its footprint in renewables, and offset Berkshire Hathaway's hefty tax bills, MidAmerican formed MidAmerican Renewables LLC in January. They are specifically hoping to repeat MidAmerican's First Solar Topaz deal, funded with $850 million in publicly rated bonds, executives [said]…MidAmerican is one of a dozen premier utilities…”