Berkshire Hathaway 2003 Annual Meeting Audience Question # 19

Warren’s long term vision for MidAmerican Energy

Warren Buffett:

Number 7.

Audience Member:

Good morning. My name is Ken Goldberg from Sharon, Massachusetts.

What is your long-term vision for MidAmerican Energy?

And specifically, assuming the repeal of the Public Utility Holding Company Act, what is the nature of the type of assets that you would be interested in acquiring, be they generation, transmission, distribution-type properties?

Warren Buffett:

Yeah, MidAmerican already is a big part of Berkshire. I would say it’s likely to become much bigger. It will be easier to have it become much bigger if the Public Utility Holding Company Act, which was enacted in 1935… if it were repealed.

Public Utility Holding Company Act, which is a melodiously named… called PUHCA… was enacted in 1935 in a reaction to what Sam Insull and people like that had done in the 1920s. It was very understandable.

But I really think it is quite outdated now. I mean, it is now 68 years later.

And I think we bring something to the utility field. In fact, I think we brought it in the last year.

There might well be a couple of companies that wouldn’t… would be in bankruptcy now if we hadn’t been in a position to act very quickly on certain things.

So… but with or without the repeal… and I think there’s a reasonable chance it’ll be repealed. But with or without repeal, MidAmerican, which is big now, will become quite a bit bigger. And it could become a whole lot bigger.

Now, in terms of what kind of assets we’ll buy, we don’t have a…any clear-cut preference, for example, as to whether it would be a natural gas pipeline, or whether it would be a domestic utility, or conceivably, a utility, even, in some country that we felt good about.

We will look at things as they come along. We’re always ready to act. I would say that it’s certain we’ll look at a few big deals this year. Whether we get one done or not depends on competition, depends on the sellers, and some things like that.

But something will happen with MidAmerican… over… you know, whether it’s this year, or next year, or the year after, we’ll get a shot at doing something significant.

And the nature of the energy field is you’re talking big money, always. I mean, these are not lemonade stands. And you know, we’re talking in the billions, frequently, on the kind of assets involved.

So it will be a… we’ve got a fabulous management… we’ve got two people running that in Dave Sokol and Greg Abel, who are… they’re terrific businesspeople.

You know, they… and, incidentally… I should mention this publicly… they have done things that have made Berkshire significant money that had nothing to do with MidAmerican.

In other words, they have spent their time and energy, weekends, putting together a couple of things that MidAmerican itself could not do, but Berkshire could. And they didn’t get paid a dime for that and MidAmerican did not get paid a dime for that.

So they have contributed to Berkshire’s welfare beyond what they’ve contributed simply as managers of MidAmerican.

So it’s a terrific asset. We love the idea of pouring money… behind them, and you’ll see something happen.

Charlie?

Charlie Munger:

Well, I… the really interesting thing about it is the fact that the field is so big. I mean, you’re talking about an enormous field.

One thing a modern civilization needs is energy, so we’ll be very disappointed if there aren’t more activities.

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