Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. The 2015 Berkshire Hathaway Annual Meeting just wrapped up. I had a chance to talk to Andy Bischof--he is an energy analyst at Morningstar--about some of the energy-related questions that came up during the meeting.
Andy, thanks for joining me.
Andy Bischof: Thank you.
Glaser: So, let's talk about distributed generation--a question that our Gregg Warren actually asked. [He wondered] if that was going to be a threat--having smaller, perhaps, solar cells at people's home instead of a big utility. What was Buffett's response to that? Do you think it is a threat to the utility business?
Bischof: So, we identified distributed generation as a threat last year, and the response was kind of a mixed response. They look at it as a threat. It's a threat if you can't get the regulatory construct correct. But it's also an opportunity if you can work directly with your customer to meet that customer's need to put solar on the roof.
Glaser: They also talked about Berkshire Hathaway Energy's renewable resources. Do you think that's an area they are going to continue to invest in?
Bischof: Yes, particularly in the near term, as they continue to get tax-credit support. While this will wane, I think we will continue to see solar development in the future as solar becomes much more economic in the next few years.
Glaser: If those tax credits were to go away for any reason, would you see a big shift in strategy, then?
Bischof: I think you'd see a shift away from wind, but I still think you can do solar generation economically, particularly on the residential side.
Glaser: On the acquisition front, they said they are always looking for ways to give Greg Abel more to do. Do you see them really having a lot of prospects there for bolt-on acquisitions?
Bischof: It's definitely the strategy, going forward, to expand that business. Warren Buffett seems to love the capital-intensive nature of the industry. But we would highlight just to be careful. Right now, we view utilities as a little bit pricey. So, while you can look for strong growth, a strong management team, and great opportunities in terms of a constructive regulatory environment, you just have to be careful of the price you pay.