2009: What's the return on Berkshire's investment in wind farms?
AUDIENCE MEMBER: Jim Hadden (PH), a Cornhusker in Davenport, Iowa.
On our drive over from Davenport, we noticed two rather large wind farms by MidAmerica Energy.
And my question is, when will be the return on investment of these wind farms? And are Berkshire Hathaway looking at any other alternative energies?
WARREN BUFFETT: Yeah, we’re the largest, in terms of owned capacity in wind, in the country, I believe, of any utility. And Iowa has the greatest percentage of its electricity generated by wind.
But of course, the wind only blows about 35 percent of the time in Iowa, something like that. And we’ve got people here who can be more accurate than that. But — so you can’t count on it for your base load or anything of the sort.
But Iowa has been very, very receptive and, I would argue, progressive, in encouraging us — and we’ve encouraged them, in return — to bring in a lot of wind capacity.
We are a net exporter of electricity in Iowa. Iowa’s far more than self-sufficient in our service area in terms of electric generation. And I think that works to the benefit of the people of Iowa.
And we have an arrangement with Iowa. We — as you may know, we have not increased our rates at all — what — for more than a decade now. And that’s been achieved by efficiencies. It’s been achieved with wind generation.
We have a return that’s built in on that that’s fair to us, fair to the people of Iowa. And part of that return comes in the form of a tax credit — I think it’s 1.8 cents per kilowatt hour — that is given to anybody in the United States that develops wind power generation.
We love the idea of putting in more wind. And we’re doing it. We’re doing it out at PacifiCorp. And I think we’ll continue to be a leader in it.
One advantage we have over, perhaps, some people is that we are a big taxpayer, so that we don’t have to worry about whether the tax credits are useful.
I guess the tax credit could be sold, also. But we don’t need to do that in our particular situation. So you’ll see more and more wind generation by the MidAmerican companies.
When we went into PacifiCorp out on the West Coast, to six states out there, they had virtually nothing — maybe nothing at all — in wind generation. And we’ve developed a lot. And we’ve got more coming on.
Charlie?
CHARLIE MUNGER: Oh, I think in practically anything that makes sense in utilities, the Berkshire subsidiaries will be leaders. I think we can all be very proud of MidAmerican and its two leaders.