Buffett fights off election threat to his Nevada power utility
Warren Buffett's Berkshire Hathaway successfully defended the near monopoly held by its electric utility in Nevada, after an expensive and contentious state referendum that pitted the famed investor against fellow billionaire Sheldon Adelson, the Las Vegas casino magnate.
Nevadans voted overwhelmingly to reject a ballot measure – known as Question 3 – which would have deregulated the state's power market and allowed residents to choose the provider of their electricity.
If it had passed, Berkshire Hathaway's NV Energy subsidiary would has been forced to dispense power plants and contractual obligations worth billions of dollars, according to a state commission.
Mr Buffett's company pumped more than $ 60m into the race, bankrolling a group known as the Coalition to Defeat Question 3, which Characterized the proposal as too risky, with costs that would ultimately be borne by customers. The utility warned in filings with US securities regulators earlier this week that its "political activity" had cut into its profitability this year.
The Coalition to Defeat Question 3 far outpants its opponent, the Nevadans for Affordable Clean Energy Choices, which raised more than $ 30m from Mr. Adelson's Las Vegas Sands casino business and a data center provider called Switch.
Dave Chase, the executive director of Nevadans for Affordable Clean Energy Choices, said the ferocity of spending on the campaign reflected the profits at stake. "These guys do not want this," he said of NV Energy. "It's bad for their bottom line."
Mr Buffett and Berkshire Hathaway did not respond to a request for comment. NV Energy said in a statement: "We take the responsibility of serving Nevada's electrical needs, and we remain focused on providing our customers with reliable electrical service and delivering on our promise to double renewable energy by 2023 while keeping rates low."
Berkshire bought NV Energy for $ 1[ads1]0.4bn in 2013, including the assumption of roughly $ 4.8bn of its debt.
The threat to its monopoly in Nevada first emerged two years ago, when the same ballot measure passed by an overwhelming 72 percent. Nevada's rules on ballot measures require proponents to field the same question on the ballot a second time in order to amend the constitution.
Voter opinion shifted dramatically this year as spending on Question 3 surged. With 16 of the 17 counties reporting by early Wednesday morning, 67 percent of residents had voted down the proposal, according to the Nevada secretary of state.
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Several environmental groups backed NV Energy, including the Sierra Club and the Natural Resources Defense Council. The Sierra Club said the utility had made progress developing renewable energy sources, including its decision to buy energy from six solar farms under construction in the state. NV Energy puts the cost of that investment at more than $ 2bn.
Berkshire, which has long heralded its investment in wind and solar energy, still has a fight ahead to protect its position in Nevada. Several casinos on the Las Vegas Strip including Wynn and MGM properties – have already stopped using NV Energy, although a utility commission forced them to pay high upfront fees to switch to a lower cost provider.
Clean energy proponents in Nevada also scored a win on Tuesday. Nearly 60 percent of voters approved a measure to amend the state constitution that would require utilities to source at least half of their energy from renewable sources by 2030. That fight, like Question 3 before it, must survive a second vote before taking effect.
