NV Energy, Inc. (NVE), Berkshire Hathaway Inc. (BRK.A): The Not-So-Dirty Secret Behind Warren Buffett’s Recent Buy

This is where Nevada — and more specifically NV Energy, Inc. (NYSE:NVE) — comes into play. Nevada is well positioned to service the California market with alternative energy because of location and the favorable environment for both solar and geothermal energy. While the company may not have large amounts of alternative energy in its current portfolio, there are over 1,000 MW of alternative energy under construction. Also, other companies in the the state combine to have plans to bring on over 5,400 MW of solar power on board in the next several years.

But for all that to be put into use, it will need to go though NV’s transmission system, which owns most of the connections between Nevada and California. So the company is in the process of constructing the ON line transmission project, a 500-MW transmission line that will connect the major generation facilities across the state with the trans-border connections near Las Vegas. With wholesale prices for electricity in Southern California reaching $50 per MW-hour, these transmission lines could score a major win for Nevada energy producers, NV Energy, Inc. (NYSE:NVE), and now Berkshire Hathaway Inc. (NYSE:BRK.A).

What a Fool believes
This isn’t the only time a Berkshire Hathaway Inc. (NYSE:BRK.A) purchase unearthed major upside in the energy markets. With the boom in Bakken crude production, Burlington Northern Santa Fe has become a major transportation option for refiners on both the East Coast and West Coast. The company, in a dual-line partnership with CSX Corporation (NYSE:CSX), is moving 300,000 barrels of oil per day to Albany, N.Y., for transport to refineries in Canada and the U.S. With costs for moving oil to the East Coast in the neighborhood of $13-$15 a barrel, these shipments alone represent $4 million a day in revenue that did not exist only a year ago. Buffett has been doing this for a long time, but he still seems to be a couple steps ahead of the rest of us.

The article The Not-So-Dirty Secret Behind Warren Buffet’s Recent Buy originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway.

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