Here's a classic utility company story: make money by providing power, then spend a lot of that money because your power lines allegedly started some fires. PacifiCorp, the utility owned by Warren Buffett's Berkshire Hathaway (BRK-A), just agreed to pay $575 million to the U.S. government on Friday. The settlement covers allegations linked to six wildfires in Oregon and California that torched close to 290,000 acres of federal land. It's a big check to write, but it's also part of a much bigger financial picture that involves selling assets just to stay afloat.

According to reports, the government accused PacifiCorp of negligence, saying the company allowed its power lines to ignite the fires—five from September 2020 and one from July 2022. PacifiCorp, for its part, has denied liability in this agreement. Think of it as the corporate version of "I'm not saying I did it, but here's some money to make this go away." The $575 million will reimburse firefighting costs and support restoration work by the Forest Service and the Bureau of Land Management. The Justice Department said the deal aims to balance the government's recovery of costs "with PacifiCorp’s ability to continue providing affordable electricity." In other words, they want their money back, but they don't want to bankrupt the power company in the process.

So, what does a $575 million settlement mean when you're a utility? Well, it turns out this is just one piece of a much larger, and more expensive, puzzle. PacifiCorp has now committed over $2.2 billion to settle wildfire-related claims. Ryan Flynn, the company's president, called this latest settlement part of their commitment to resolving claims while maintaining financial health. That "maintaining" part is doing some heavy lifting here. The Justice Department had initially sought over $900 million in damages, so in that context, $575 million might look like a relative bargain. But the real number that tells the story is $55 billion—that's roughly how much in total claims PacifiCorp is facing from wildfires that damaged more than 2,000 buildings and burned about 500,000 acres. When your potential liabilities are nearly a hundred times your latest settlement, you have a problem.

Which brings us to the asset sale. To help manage this financial pressure, PacifiCorp has agreed to sell assets in Washington state to Portland General Electric (POR) for $1.9 billion. This isn't just selling off some old equipment; it's a strategic move to get cash. The assets include key facilities like the Chehalis natural-gas plant and several wind farms. For Portland General Electric, this is a big expansion play. The acquisition is expected to enhance the company's earnings and dividend growth and represents a strategic move into Washington state. They're even bringing in Manulife Investment Management as a minority partner in the deal.

Portland General Electric plans to operate these assets through a new subsidiary regulated by the Washington Utilities and Transportation Commission. The company thinks the deal will be accretive—that's finance-speak for "boost earnings per share"—in the first full year after it's done. Regulatory reviews are expected to wrap up within 12 months of filing. Financially, Portland General Electric is in a position to make this work. They reported a GAAP net income of $306 million for 2025, with an adjusted net income of $336 million. Looking ahead, they project adjusted earnings for 2026 to be between $3.33 and $3.53 per share, which lines up with what Wall Street was expecting. That outlook is based on anticipated increases in energy deliveries and keeping operations running smoothly.

So, to recap: A Berkshire-owned utility pays hundreds of millions to settle wildfire claims, sells nearly $2 billion in assets to raise cash, and the buyer gets a nice earnings boost from the deal. It's a story about managing liability, strategic asset shuffling, and the high cost of doing business when your business involves things that can, unfortunately, catch fire.