Quote:
Originally Posted by bizaro86
I'd be in favour of that. When Berkshire Hathaway decided to buy Altalink at a premium to it's regulated rate base, that implies to me that the regulated returns on equity are probably too high. Because Berkshire is run by the best investor in the history of investing, if they think it's worth paying a premium for AB transmission assets then the rest of us are overpaying.
I appreciate (given your comment on five years of held prices) that you may not be able to comment on Altalink stuff, and so I should mention that I do respect Berkshire Hathaway Energy as operators of electricity infrastructure quite a lot. They've consistently been able to earn their returns with smaller price increases than other operators.
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The utilities would argue that the equity thickness (37%) and the generic cost of capital (8.25% if memory serves) are both too low. My opinion is they need to be juicy enough to incent investment but contrasted with managing the risk in the event of insolvency.
I do believe Berkshire has been good for Albertans as they have a much better reach than SNC did into capital markets and by far a much better public reputation. That said, they aren't dumb and know a good deal when they see it. I do not believe for one second that they overpaid for AltaLink, there were other bidders, we just don't know exactly who they were. We only know that SNC agreed to sell to Berkshire.
I left AltaLink in September for greener pastures. Nothing I've posted would be considered 'inside information', everything I posted is publicly available.