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BRK-B · Forward model · Berkshire Hathaway Energy · Bear case

What has to happen in Berkshire Hathaway Energy

Model as of

This page changes Berkshire Hathaway Energy inside the complete BRK-B model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

BRK-B forward model
Horizon
Consolidated fair value $459.71 all other verticals held in this portfolio case
Final-quarter revenue $7.12B 7% of company revenue
Explicit segment contribution $9.00B EBITDA less segment capex, before corporate items

The basis quarter is a benign one and three disclosed items say so. There was NO significant catastrophe event — none over $150M — in the first six months of 2026, against $1.1 billion of Southern California wildfire losses in 1H 2025, and underwriting earnings still fell 13.1%. On top of that, $1.5 billion of favourable prior-accident-year development was taken in the half, $268M of it at GEICO and $609M at BH Reinsurance in the quarter alone — a release of reserves, not a rate. And PacifiCorp's 2020 Oregon and 2022 McKinney wildfire litigation is live and unresolved in Note 22. This case takes underwriting back below its through-cycle margin, marks Pilot down to roughly its 0.30% trailing-twelve-month margin, charges BHE and the industrials a point for a wildfire accrual and for the $2,084M of energy production tax credits a policy change could remove, and re-rates the operating businesses to a 10x exit at a 10.5% cost of equity. WHAT THIS CASE CANNOT DO, and it is the larger risk: netCash is fixed at a 30 June 2026 mark on a $323,779M equity book carrying $217,258M of unrealised gains, and the engine cannot move it per scenario. A 20% drawdown in that book is $64,756M gross; the deferred tax liability falls with it by $14,764M, so netCash falls $49,992M — $23.28 a share, 4.5% of fair value — with nothing in the DCF moving at all. Subtract that by hand from every case on this page. Result: $459.71 a share, -8.7%.

Berkshire Hathaway Energy

Basis quarter$6.74B
Final quarter$7.12B
Implied CAGR+1%
Final revenue mix7%

Regulated utilities, natural gas pipelines, other energy businesses and HomeServices real-estate brokerage, against energy cost of sales, operations and maintenance, depreciation and BHE's own interest expense. $6,735M of revenue and $604M of pre-tax earnings in the basis quarter. This is the only vertical with a large NEGATIVE income tax line: energy production tax credits produced a $333M tax BENEFIT on $604M of pre-tax earnings, which is why the company-wide 18.267% effective rate is well below 21%.

Last four quarters
2025 Q3 $7.30B Reported
2025 Q4 $6.22B Estimated
2026 Q1 $6.66B Reported
2026 Q2 $6.74B Reported
US regulated utilitiesNatural gas pipelinesOther energy businessesHomeServices real estate
Sequential growth +0.6%/qtr decaying toward +0.6% 0.55% a quarter. Trailing-twelve-month revenue growth was 2.15%; rate base grows, load does not.
Berkshire Hathaway Energy

Latest: $7.12B (2031Q2E)

Period Value
2022Q1 $6.02B
2022Q2 $6.54B
2022Q3 $7.56B
2022Q4 $6.27B
2023Q1 $6.45B
2023Q2 $6.36B
2023Q3 $7.28B
2023Q4 $5.91B
2024Q1 $6.28B
2024Q2 $6.49B
2024Q3 $7.33B
2024Q4 $6.24B
2025Q1 $6.36B
2025Q2 $6.42B
2025Q3 $7.30B
2025Q4 $6.22B
2026Q1 $6.66B
2026Q2 $6.74B
2026Q3E $7.71B
2026Q4E $6.44B
2027Q1E $6.71B
2027Q2E $6.80B
2027Q3E $7.79B
2027Q4E $6.51B
2028Q1E $6.78B
2028Q2E $6.88B
2028Q3E $7.88B
2028Q4E $6.58B
2029Q1E $6.86B
2029Q2E $6.96B
2029Q3E $7.97B
2029Q4E $6.66B
2030Q1E $6.94B
2030Q2E $7.04B
2030Q3E $8.06B
2030Q4E $6.73B
2031Q1E $7.02B
2031Q2E $7.12B

Assumptions & reasoning

  • SEASONAL, and by far the strongest signal in the company. Factors [0.9686, 0.9800, 1.1193, 0.9322] from a ratio-to-centred-four-quarter-moving-average over 2022 Q1 to 2026 Q2, renormalised to mean 1.0: signal 0.1871 against a worst window-to-window spread of 0.0330, clearing it by 5.7x. It is summer cooling load, and the basis quarter is deseasonalised by the 0.9800 second-quarter factor before the driver runs.
  • 8.97% basis quarter against 9.59% trailing twelve months and 9.06% over ten quarters. BHE's quarterly margin swings from 5.16% to 15.01% on weather, and that swing is carried by the REVENUE seasonality above; the margin is deliberately not seasonalised as well, because that would double-count the same weather.
  • BHE is where the model's zero capex intensity costs the most. The segment spent $2,531M on property, plant and equipment in the quarter against $1,048M of depreciation. Setting capexIntensity to that difference over revenue would be 22.0% against an 8.97% pre-tax margin and would drive this vertical's free cash flow to about -13% of revenue for twenty straight quarters. See the model notes for how the gap is quantified instead.
  • PacifiCorp's 2020 Oregon and 2022 McKinney wildfire litigation is live and unresolved in Note 22 of the 10-Q, and $2,084M of 2025 energy production tax credits are a policy variable rather than an earned margin. Both sit in the bear case.
  • Segment earnings before income taxes are struck after this segment's OWN interest expense. The seven segments' interest lines sum to $1,437M in the basis quarter against $1,335M of CONSOLIDATED interest expense, so every dollar of Berkshire's interest cost is already charged inside a vertical margin. That is why no debt is netted in spec.netCash: subtracting the $128,599M of borrowings as well would take the same cost twice.
  • Berkshire files no fourth-quarter report. Every Q4 point here is the annual figure less the nine-month figure from that year's third-quarter 10-Q and is flagged estimated for that reason; Q1, Q2 and Q3 are read directly from the filed segment notes and are not.
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