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PacifiCorp faces $55 billion of claims over 2020 fires

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Wildfire victims accused PacifiCorp of negligence

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Berkshire CEO-designate: Utility can't simply pay everyone

By Jonathan Stempel

Nov 3 (Reuters) - A utility owned by Warren Buffett's

Berkshire Hathaway ( BRK/A ) warned on Monday it could face

strained liquidity and lose its investment-grade status after a

judge sped up the pace of trials over the 2020 Labor Day weekend

wildfires in Oregon.

PacifiCorp has already set aside $2.85 billion, including

$100 million in the third quarter, for lawsuits seeking $55

billion over the burning of more than 2,000 structures and

500,000 acres in Oregon and northern California.

Victims blaming the Portland, Oregon utility say it was

negligent in failing to shut off power lines during a windstorm.

The U.S. government and Oregon are also suing PacifiCorp over

damage to natural resources. PacifiCorp has denied negligence.

In a regulatory filing, PacifiCorp said a Multnomah County,

Oregon judge's recent decision to roughly quadruple the pace of

trials in the so-called James litigation "will cause significant

financial strain on PacifiCorp's liquidity and will put pressure

on PacifiCorp's credit metrics."

PacifiCorp said the more aggressive schedule, including

dozens of trials in 2026 and over 100 more in 2027 and 2028,

could leave it "unable to obtain the required funding to meet

its liquidity needs due to cash requirements for judgments."

It also said a downgrade to junk status could make it harder

to serve customers, buy power, address outages, and pay

suppliers and bondholders. PacifiCorp said it expects to have

sufficient liquidity "beyond a year."

Neither PacifiCorp nor its parent Berkshire Hathaway Energy,

both units of Buffett's Omaha, Nebraska-based conglomerate,

immediately responded to requests for comment.

PAYOUTS AND APPEALS

The utility faced $52 billion of claims in the James

litigation, where 109 plaintiffs have been awarded $589 million

in a series of mini-trials.

PacifiCorp has filed appeals, and called the chance of a

giant overall payout "remote."

The utility has agreed to pay wildfire claimants more than

$1.5 billion overall, including a $125 million settlement last

month with 93 Oregon wineries and vineyards.

Berkshire paid $5.1 billion for PacifiCorp in 2006.

At Berkshire's annual shareholder meeting in May, Buffett

said, "we made some mistakes" in not shielding PacifiCorp better

from wildfire liability.

Berkshire Vice Chairman Greg Abel, who succeeds Buffett as

chief executive on January 1, said PacifiCorp cannot make

keeping the lights on a priority during wildfire threats, but

also cannot be an "insurer of last resort" when damage occurs.