Could billionaire Warren Buffett be the solution to Texas’ energy grid woes? The energy arm of Buffett’s conglomerate Berkshire Hathaway has proposed to the Texas Legislature to build an $8 billion backup system to protect the grid during extreme weather.
But Mitchell Schnurman, business columnist for The Dallas Morning News, says it’s unclear whether Texas will take the company’s offer.
Berkshire Hathaway’s proposal is take it or leave it, sidestepping the bidding process that would normally happen for such a project. Schnurman says that could be cause for concern since the ownership and operation of the backup electrical generation plants would fall to one company.
Berkshire Hathaway sees that as an advantage.
“They’re counter to the idea of breaking it up in pieces,” Schnurman said.
He says the company’s argument is, “You won’t know who’s responsible if it fails to deliver. We’re guaranteeing it. You won’t have to point any fingers; we’ll be able to solve it.”
But that solution comes with a large price tag.
Highlights from this segment:
– Berkshire Hathaway proposed to build 10 one-gigawatt plants across the state that could be activated during an emergency, and would cost $8.3 billion that the company would pay for up front.
– Berkshire Hathaway would then receive a 9.3% rate of return on its investment, amounting to $800 million per year.
– Electricity customers would pay back that investment through their monthly bills. Residential customers would pay $3 per month, commercial customers would pay $9 and manufacturers would pay $60, for 40 years.
– The plants would run on their own, independent natural gas reserves so they wouldn’t be at risk of outages.
– One energy expert has said Texas could “harden” its own natural gas system to withstand weather emergencies, which would be cheaper than the Berkshire Hathaway plan.