Friday, June 12, 2009

Did Congressman Markey Attempt Witness Intimidation With the CEO of Berkshire Hathaway's MidAmerican Energy? (BRK.A)

UPDATE II: A bit more detail from the Omaha World-Herald.
I added Warren and Charlie's thoughts on cap-and-trade below the headline story.

Original post:
We've relayed CEO David Sokol's thinking on Waxman-Markey in our May post "Berkshire Hathaway's MidAmerican Energy on Waxman-Markey: "We Don't Much Care For It" (BRK.A)" and Wednesday's "Berkshire Hathaway's MidAmerican Sees Carbon Trading Adding $120 to Bills (BRK.A)".

Late yesterday The Hill reported:

GOP charges Markey with climate witness intimidation
Energy panel Republicans are levying accusations of witness intimidation against Democratic Rep. Ed Markey (D-Mass.), one of the key authors of the contentious House climate change bill.

Republicans have seized on a letter – a copy of which was obtained by The Hill – that Markey penned to Federal Energy Regulatory Commission Chairman Jon Wellinghoff asking FERC to investigate the actions of a major energy company on the same day that the company’s CEO was set to testify before the energy panel on the dangers of a carbon cap and trade system.

According to the June 9 letter, Markey requested that Wellinghoff probe how thoroughly MidAmerican Energy Holdings – a $41 billion company in which Warren Buffet is a major investor – followed up on promises to invest as much as $15 billion in electric transmission expansion in the wake of the repeal of the Public Utility Holding Company Act in 2005.

In fact, Markey singled out MidAmerican Energy to also ask FERC to look into his concerns “that the repeal of PUHCA has also freed large multi-state public utility companies to diversify into other potentially risky business, to the potential detriment of utility investors and consumers.”

“For example, MidAmerican Holdings has acquired the second largest real estate brokerage company in the country,” Markey wrote in his six-page letter. “What protections have been put in place to prevent utility shareholders, such as those of MidAmerican Holdings’ regulated utilities, to prevent them from rate increases, higher costs for borrowing, or other risks with might be associated with unsuccessful or failed diversifications?”

Rep. Fred Upton (R-Mich.), the ranking Republican on Markey’s Energy and Environment Subcommittee, received a copy of the letter.

GOP sources confirmed that Republicans reacted furiously when they saw that the letter was sent the very same day that MidAmerican’s CEO, David L. Sokol, was testifying as a Republican witness before Markey’s subcommittee.

In a move to mollify a number of panel members, Waxman and Markey held a June 9 hearing in Markey’s subcommittee on the allocation of carbon emission allowances provided for in the climate change legislation completed by the full panel just prior to the Memorial Day recess.

In his prepared remarks to the subcommittee, Sokol said that the “bill’s trading mechanism will impose a huge and unacceptable double cost on customers: first to pay for emission allowances, which will not reduce greenhouse gas emissions by one ounce, and then for the construction of new low- and zero-carbon power plants and other actions that will actually do the job of reducing these emissions.”

Noting that he supported the bill’s underlying goal of reducing greenhouse gas emissions to 80 percent below 2005 levels by 2050, Sokol said the bill will cost “hundreds of billions of dollars,” just as Republicans have argued in their objections to the Waxman-Markey bill.

GOP sources said Republicans on the Energy Committee, including Ranking member Rep. Joe Barton (R-Texas), confronted Markey about the letter.

The results of those conversations could not be learned.

But on June 10, the day after the allocations hearing, Markey penned a second letter to Wellinghoff to “clarify questions contained in my June 9, 2009 letter,” in which Markey wrote, “[M]y intent was for the Commission to analyze the activities of all investor-owned utilities with respect to their investments in transmission lines since PUHCA was (sic) revealed, and their investments in enterprises outside their core business.”

“I did not intend for the Commission to focus on just one company but rather on the industry as a whole,” Markey wrote....MORE
From our May 7 2009 post"Warren Buffett on Cap-and-Trade (BRK.A)":
...Berkshire Hathaway owns over 22% of the nation's largest coal hauler, Burlington Northern.
The company's utility operation, MidAmerican Energy, owns one of the, if not the, largest natural gas pipeline systems in the country. MidAmerican also boasts the largest utility-owned wind generation system in the country.

Lastly, as a large property/casualty insurer and as a very large reinsurer they have a profound interest in natural disasters. Going through the Omaha World-Herald's coverage of the Q&A session of the annual meeting, a keyword search found no mention of "climate change" or "global warming". A "sustainable business practices" proposal garnered support from 4% of the shares.
Mr. Buffett is an unofficial advisor to President Obama.
Here's the video from CNBC, the transcript is below....
And from May 5, "Berkshire Hathaway's Munger on Cap-and-Trade ("Monstrously Stupid Right Now...Almost Demented"); Warren and Charlie on Wind and Solar (BRK.A)"