Buffett & Berkshire's MidAmerican Against Waxman-Markey Bill (BRK-A)

MidAmerican Energy Holdings Company, which is owned by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A), has issued a statement objecting to the proposed American Clean Energy and Security Act, also known as the Waxman-Markey bill. MidAmerican said that it plans to “oppose the bill in the House of Representatives.”

The company’s objections are based on what it says are two costs that MidAmerican’s customers will be obliged to pay because of the cap-and-trade program that is part of the bill. The auctioned emissions allowances “will do nothing to reduce greenhouse gas emissions.” Customers will also be forced to pay to replace MidAmerican’s fossil-fuel plants with cleaner generation.

MidAmerican says it believes that power generators can achieve up to 83% of the emissions reductions by 2050 proposed in Waxman-Markey without adding the cost of the emissions allowances. It does not say how it plans to do that other than to point to an “alternative compliance mechanism to be enacted for the states.”

Cap-and-trade is coming under increasing scrutiny as the country’s economy struggles to recover. The original proposals in the Waxman-Markey bill have already been amended to provide some allowances at no cost, rather than the original plan that would have auctioned all the allowances. The single most important part of the bill’s plan, though, hasn’t changed. That is that there will be an established cap on the amount of carbon that electricity generators will be allowed to emit.

Altering the trade part of cap-and-trade is simply re-arranging deck chairs. Dropping the emissions cap amounts to a torpedo into the side of the ship.

Paul Ausick
May 19, 2009