Greg Abel Says Berkshire Will Serve the Hyperscalers Only If Its Other Customers Don’t Pay for It

Key Points

• Greg Abel said this week that serving hyperscalers can’t raise other customers’ rates and must deliver them a net benefit.

• Data centers accounted for about 8% of Berkshire’s utility load in Iowa last year, and Abel said more is coming.

• After-tax earnings at the company’s U.S. utilities rose 38% year over year in the second quarter.

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Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) CEO Greg Abel joined CNBC’s “Squawk Box” from Tokyo on Wednesday, and the most detailed answers covered the business he knows best. Abel ran Berkshire’s energy operation for years before succeeding Warren Buffett as CEO in January.

So when the conversation turned to artificial intelligence (AI) data centers and the power they need, he had specifics.

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His message came with a condition attached. Berkshire wants the hyperscalers’ business (the giant cloud companies building those data centers), but only on terms that leave its utilities’ other customers unharmed. That bar matters because the energy business is one of Berkshire’s better growers this year, earning about $2 billion in the first half. How much of that growth can Berkshire capture on those terms?

Image source: Getty Images.

Abel’s conditions

Speaking with CNBC’s Becky Quick, Abel framed Berkshire’s role in the build-out as supplying power and electricity, not owning the data centers themselves. He said the company has operated by the same basic principles from the start and has shared them with the hyperscalers, governors, and state regulators.

“[W]e are interested in serving these hyperscalers … if there was no impact to the rates of our other customers,” Abel said. “And in fact, we’ve pretty much taken the approach. There has to be a net benefit to our customers.”

The other conditions center on the communities. They have to understand a project’s impact on water, which Abel said has become much more manageable as the industry limits water use.

And they have to want the facility there in the first place. In Abel’s view, a data center has to be welcomed by its host community.

Iowa already shows what a yes looks like

Iowa, where Berkshire’s MidAmerican Energy utility operates, is the place to look. Notably, data centers accounted for about 8% of the utility’s load there last year, Abel said, and more is on the horizon.

Berkshire’s utility results are climbing alongside that load. After-tax earnings at the company’s U.S. utilities rose 38% in the second quarter from a year earlier, to $597 million, and 11% year over year in the first half of 2026. Retail volumes across those utilities were up about 3% through June, with MidAmerican, the Iowa utility, leading at 6%. Electric utility margin (revenue minus energy costs) expanded 8% year over year in the quarter, helped by higher retail volumes. The whole segment also accelerated as the year went on. After roughly flat earnings in the first quarter, Berkshire Hathaway Energy grew earnings 27% year over year in the second quarter, to $891 million.

That growth takes capital, and Berkshire is spending it. Of the company’s $10.6 billion in first-half capital expenditures, $6.7 billion was attributable to the energy business and the BNSF railroad. The two units forecast about $8.6 billion more over the remainder of 2026.

For a regulated utility, that spending is the growth. After all, rates are largely set to recover costs plus a return on invested capital, so every data-center project that clears Abel’s bar grows the base the company earns on.

Can the growth case survive the pushback?

Abel did flag one thing that could slow this down.

“There is a lot more pushback in the communities across the U.S.,” he said.

He has long held the view that energy would be the constraint on the build-out, and he described the community reaction as a challenge on top of it.

So far, though, the pushback hasn’t cost Berkshire a single energy-infrastructure site — none has been rejected to date, Abel said, and construction continues.

And I’d argue the conditions are exactly why. A utility that can tell its regulators the hyperscalers won’t be subsidized by everyone else’s power bills is a harder target for that resistance. In Iowa, Abel added, the property taxes these projects pay are a substantial source of funding for schools and local services.

Of course, a moratorium in the wrong state or a community that says no could still stall a project regardless of the terms. And the utilities won’t grow 38% every quarter — the second quarter’s jump got help from production tax credits, and comparisons may get tougher from here.

Ultimately, though, I think Abel’s rate condition is less a limit on the growth case than the substance of it. Berkshire is qualifying load it can serve for decades in states that want it there. And it is putting billions of dollars behind projects regulators have little reason to fight.

Data centers were about 8% of Berkshire’s Iowa load last year. On Abel’s terms, that share can keep climbing.

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Daniel Sparks and his clients have positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.