Buffett regrets $2B bet on Texas utility

[TexasTowelie]

HOUSTON – Warren Buffett says Energy Future Holdings will almost certainly file for bankruptcy this year unless natural gas prices surge.

The billionaire investor is only the latest to predict that the Dallas company — which owns billions in Texas electric utility assets — is headed for bankruptcy, weighed down by more than $41 billion in debt.

It would make for one of the largest debt-laden bankruptcies of a non-financial company since the 1980s if its bank account ran dry this year, Moody’s Investors Service had said in September. Buffett did not wait to find out.

His investment firm Berkshire Hathaway ate $873 million in pre-tax losses last year when it sold its stake in the company, originally a $2 billion chunk of debt in 2007 in one of the largest leveraged buyouts in history.

More at http://fuelfix.com/beaumont/2014/03/03/buffett-regrets-2b-bet-on-texas-utility/ .

[aquart]

1. Is this a privatized utility?

[TexasTowelie]

2. Yes, it used to be known as TXU before it was split into I believe three different companies

(generation, transmission lines, and oops I can't remember the third). The company heavily burdened with debt when the split occurred. They were betting on the price of natural gas to rise and it went down instead which is the primary reason driving the bankruptcy.

[aquart]

3. So. Another privatization catastrophe?

[TexasTowelie]

4. I do not believe that it was ever a public entity. It usually has the highest rates of any electric

utility in Texas.

It actually is a victim of hedge fund managers instead. Here is a link to a 2007 article regarding the sale of the company.
http://www.nbcnews.com/id/17337495/ns/business-us_business/t/utility-txu-agrees-billion-buyout/

[Downwinder]

5. Atmos energy -- natural gas

[Downwinder]

6. In a Bankruptcy do the rate payers

get to collect back from the prepaid development fund?

[TexasTowelie]

7. Do you feel the security of a secured creditor?

[Downwinder]

8. Don't expect anything. Might make it rain

for some Attorneys. Plus the PUC is supposedly protecting the rate payers interests.

Before the LBO there was enough in the fund for ten proposed generation plants.

[demigoddess]

9. I would have invested in

solar power installments on homes. That might have worked in Texas.