Buffett has raised concerns that the growing danger of wildfires has altered the outlook for investments in utility companies. He remarked that the business model for public utilities has lost some of its former appeal. Buffett cited incidents involving a major Hawaiian power provider and a California-based firm as clear examples of how wildfire-related liabilities now influence investor decisions.
In August 2023, the shares of a prominent Hawaiian electric company dropped nearly 76% after fears arose that the firm might face significant claims stemming from deadly fires on Maui. This decline has not been reversed, leaving investors uneasy. In a similar episode, a California utility experienced enormous financial setbacks as it compensated for damages from several fires between 2017 and 2021. That firm filed for bankruptcy, and its stock value fell by up to 95%. More recently, the stock of another well-known California provider fell about 37% amid concerns over potential claims linked to a fire incident in Los Angeles in early 2025.
Buffett acknowledged that his own conglomerate is affected by these changes. The value of its energy division has decreased notably over the past two years, driven by shifting social and regulatory factors. Greg Abel, soon to lead the firm and now in charge of its energy group, reiterated the caution. He noted there is no quick fix for the challenges faced by the sector as teams work daily to lower financial risks related to wildfire incidents, a problem that appears persistent. Market observers remain cautious amid intensifying regulatory and safety pressures.
