Buffett eyes energy sector - report

[HenryTo]

Not sure what to make of this - I haven't kept track of the utility sector in awhile even as the Dow Utilities have been making all-time highs. Thoughts anyone?

In general, utilities make a good and stable return - as rates are regulated and are set according to a cost of capital model, etc. Utilities should continue to do well in a stable, disinflationary interest rate environment.

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Buffett eyes energy sector - report
By MarketWatch
Last Update: 1:15 AM ET June 22, 2005

SAN FRANCISCO (MarketWatch) -- Warren Buffett's Berkshire Hathaway is willing to invest more money in the U.S. energy sector, and he sees more opportunities in the utilities industry -- including nuclear power, according to a published report.

Buffett's views were detailed in story in the online edition of the Wall Street Journal, citing Buffett's appearance Monday before a conference of utility commissioners from Western States.

Berkshire Hathaway (BRKA: news, chart, profile) , The Journal reported, already plans to buy U.S. utility PacifiCorp from Britain's Scottish Power PLC (SPI: news, chart, profile) for $5.1 billion. Buffett also said he would invest in power-transmission lines, broaden energy markets and undertake other efforts to improve electricity reliability after the deal closes. The Journal report noted that promising such investments -- which would boost the potential value of his power holdings -- also could help Buffett win support from Western state officials who must approve the deal.

Buffett was joined at the conference by David Sokol, chief executive of MidAmerican Energy Holdings Co., which is 80.5% owned by Berkshire and through which the purchase would be made, the Journal reported.

The Journal said that Buffett reassured the commissioners that Berkshire would be a stable owner. "For the rest of your lifetimes, you'll have one owner" for PacifiCorp, The Journal quoted him as saying. The regulators had turned down requests from financial investors Texas Pacific Group and Kohlberg Kravis Roberts & Co. for permission to purchase utilities in Oregon and Arizona, in part because they feared the firms would be temporary owners, according to the report.

Buffett also said he intends to invest heavily in transmission lines and power plants. "We'll put every dime into the business that is needed -- and it'll need a lot," he pledged.