2006: Why did Berkshire invest in utilities?

AUDIENCE MEMBER: Good afternoon. My name is Robert Piton (PH) from Chicago, Illinois.

And my question is, did the possible future deployment of telecommunications services over power lines factor into Berkshire’s decision to invest in the utility space? Thank you.

WARREN BUFFETT: Yeah. The answer is no. We’re in the utility business — the regulated utility business — because we like the business as is.

Where it leads, you know, will be determined — well, in specific states — by what they want us to do and maybe by technological changes, generally.

But we’re going to earn a return on capital employed if we do an efficient job, keep consumers happy, whether we transmit it the old way or, you know, some new processes come along.

So it’s a business where we’re trying to be efficient, which means serving our customers while keeping their costs down as much as possible. And we will — even in terms of what generating sources we use — we are following the will of the people in the states in which we operate.

There are different costs associated with different forms of generation. And we feel that if people want to elect a more expensive way to generate electricity but one that they’re more comfortable with in terms of the environment, you know, that’s the decision of the people whose state in which we operate.

And we — so I do not see us — I don’t see any large developments that change the economics of what we’re doing. And we’re certainly not going in — we’re not buying an electric utility because we expect it to generate revenues from activities other than that.

Charlie?

CHARLIE MUNGER: Nothing to add.