‘Buffett Got it Wrong’ on California Fire Risk: PG&E CEO

Warren Buffett’s warning that wildfires have turned utilities across the western US into risky investments is mistaken — at least in California, according to the head of the state’s largest electricity provider.

“Frankly, I think Buffett got it wrong in California,” said Patti Poppe, chief executive officer of PG&E Corp., during the company’s investor call Thursday. “California has done the hard work to mitigate both physical and financial risk.”

Buffett’s most recent letter to Berkshire Hathaway Inc. shareholders expressed a reluctance to invest in the company’s western utilities given their exposure to wildfire liability claims. Berkshire’s PacifiCorp utility faces hundreds of millions of dollars of liability costs from Oregon wildfires in 2020.

PG&E was driven into bankruptcy in 2019 after a series of deadly fires blamed on its equipment. Poppe pointed to measures California has taken since then to cut fire risk. The state has set up a $21 billion wildfire insurance fund to backstop utilities, put shareholder liability caps on utility wildfire claims and required PG&E to carry out fire prevention plans that include hardening its grid against extreme weather.

“The citizens of California have never been safer from wildfire risk, and I think investors will soon come to believe that,” Poppe said.

Berkshire Hathaway Energy declined to comment.

Top photo: Residents observe the remains of their home that was destroyed during the Highland Fire in Aguanga, California, US, on Tuesday, Oct. 31, 2023. A wildfire fueled by gusty Santa Ana winds ripped through rural land southeast of Los Angeles, forcing about 4,000 people from their homes, fire authorities said.