Dan Walters

Billionaire Warren Buffett does big business deals with California

Gov. Jerry Brown praises agreement to remove Klamath River dams

California Gov. Jerry Brown says demolition corrects years-old mistakes. Video courtesy of Yurok Tribe.
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California Gov. Jerry Brown says demolition corrects years-old mistakes. Video courtesy of Yurok Tribe.

Warren Buffett, the nation’s second wealthiest citizen, lives in Omaha but with a vacation home in La Jolla, could be considered a part-time Californian.

Maybe – or maybe not – that explains why he’s been so involved lately with state officials.

There is, for instance, the quarter-billion dollars that Buffett’s pal, former Gov. Arnold Schwarzenegger, committed California taxpayers to spend to remove four antiquated power dams on the Klamath River.

The dams produce power for Pacificorp, a utility that Buffett’s holding company, Berkshire Hathaway, owns. Pacificorp supplies power to a tiny slice of far Northern California but mostly serves Oregon and other Western states.

It was part of a bi-state deal to restore salmon runs to the Klamath, but officials never adequately explained why California taxpayers should subsidize the removal of dams that probably could not be relicensed. After Schwarzenegger departed, successor Jerry Brown folded the $250 million into a state water bond.

Insurance Commissioner Dave Jones is squabbling with two Berkshire Hathaway-owned insurance companies, alleging they had “used unapproved rates in a complex insurance scheme that circumvented regulatory review.”

Jones, who’s running for attorney general, said they sold policies that left employers without effective coverage for work-related injuries and illnesses. But the firms say Jones’ department had approved the insurance plans for years, before he suddenly reversed course, and have suggested that he’s siding with a law firm that’s involved in litigation with one insurer and is a major Jones campaign contributor.

Meanwhile – and more importantly – California is on the verge of creating a multi-state electric power grid that would make Buffett’s Pacificorp a full partner in managing the flow of juice to California.

The California Independent System Operator, or CAISO, which controls the state’s grid now, contends that the partnership with Pacificorp would make the grid more responsive, save consumers money and reduce greenhouse gas emissions.

However, some legislators have criticized the regional grid because Pacificorp generates much of its power in high-emission, coal-fired plants. Some consumer activists have pictured it as a scheme to enrich private utility investors at the expense of ratepayers and a holdover from the disastrous “deregulation” of California’s power market in the mid-1990s.

Michael Aguirre, a former San Diego city attorney, has been battling the regional grid concept on behalf of the Imperial Irrigation District. He contends that the regional grid would be a private entity that would escape the scrutiny of elected officials, unlike the quasi-public CAISO.

This is a very complex, important step that, if enacted, would make a huge change in how electric power is generated, distributed and priced, but received virtually no attention when it was authorized last year in a controversial bill dealing with climate change strategy.

Before California becomes Buffett’s energy partner, the ramifications should receive a full public airing in the Legislature.