Berkshire-owned PacifiCorp pays $575 million to settle US government's wildfire claims

By Jonathan Stempel

Feb 20 (Reuters) - PacifiCorp, a utility owned by Berkshire Hathaway, BRKa.N, agreed to pay $575 million to resolve U.S. government damage claims related to six wildfires in Oregon and California that burned nearly 290,000 acres of federal land, the U.S. Department of Justice said on Friday.

The settlement resolves claims that PacifiCorp acted negligently in allowing its electrical lines to start the fires.

Five of the fires - Archie Creek, Echo Mountain Complex, Slater, South Obenchain and 242 - began during Labor Day weekend in September 2020, burning approximately 250,000 acres of federal land. The sixth fire, McKinney, began in July 2022 and burned 39,000 acres of federal land.

PacifiCorp denied liability in agreeing to settle. The Portland, Oregon-based utility has agreed to pay more than $2.2 billion to wildfire claimants, including Friday's settlement.

Ryan Flynn, president of the utility's Pacific Power unit, said the settlement reflects "our ongoing commitment to resolve all reasonable claims" related to Oregon and California wildfires, while "providing certainty for customers and progress toward a financially healthy utility.”

The Justice Department had sued PacifiCorp in December 2024 to recoup wildfire losses and, according to the utility, sought more than $900 million.

Wildfire litigation, primarily from homeowners and businesses, has strained PacifiCorp's liquidity and credit ratings.

The utility said in November it faced $55 billion of claims from fires that burned more than 2,000 structures and 500,000 acres in Oregon and northern California.

On February 17, PacifiCorp agreed to sell many of its assets in Washington state to Portland General Electric POR.N for $1.9 billion to bolster liquidity.

The Justice Department said the $575 million payment will help cover firefighting costs and allow the Forest Service and Bureau of Land Management to restore some burned land.

It "strikes a balance by addressing the government’s significant fire-suppression costs and loss of natural resources without preventing PacifiCorp from offering electricity at fair prices," Principal Deputy Assistant Attorney General Adam Gustafson said in a statement.

UTILITY SEEKS TO UNDO WILDFIRE CLASS ACTION

About $52 billion of PacifiCorp's potential wildfire liability comes from litigation by Oregon homeowners and businesses that say the utility's failure to shut off power lines during a windstorm caused four of the September 2020 fires in that state.

On February 4, PacifiCorp urged the Oregon Court of Appeals to decertify a class action for those fires and prevent victims from recovering damages for emotional distress. The court has yet to rule.

Lawyers for the victims did not immediately respond to requests for comment about the Justice Department settlement.

Berkshire, based in Omaha, Nebraska, bought PacifiCorp for $5.1 billion in 2006.

The utility's immediate parent is Berkshire Hathaway Energy, whose former chief Greg Abel succeeded Warren Buffett as Berkshire's chief executive on January 1. Buffett remains Berkshire's chairman.