Southern California Edison likely to incur ‘material losses’ related to Eaton fire, executive says
- Share via
The chief executive of Southern California Edison’s parent company said Tuesday that the company was likely to suffer “material losses” related to the deadly Eaton fire, which ignited on Jan. 7 and burned more than 14,000 acres.
Investigations into the cause of the fire are continuing and have not concluded that Edison’s equipment sparked the blaze, Edison International Chief Executive Pedro Pizarro said during the company’s first-quarter earnings call.
Edison generates billions of dollars in revenue every year and has a history of passing along the costs of disasters to customers. How will it handle the financial fallout of the Eaton fire remains an open question.
But Edison’s investigation into the start of the fire has not revealed any other possible sources of ignition, Pizarro said.
“Absent additional evidence” and “in light of pending litigation, it is probable that Edison International and Southern California Edison will incur material losses in connection with the Eaton fire,” Pizarro said.
Edison has previously acknowledged that it could be responsible for the blaze and said this month that a dormant power line might have been the cause.
But Tuesday’s comments are the clearest signal to date that the company is likely to sustain substantial losses from the devastating wildfire.
“It’s still very early days here and the liability is simply not estimable today,” Pizarro said. “I’m not sure when it may become estimable.”
The possibility that an idle, unconnected transmission line somehow reengerized on Jan. 7 is now “a leading hypothesis” for what started the destructive Eaton fire.
The Eaton fire killed 18 people and destroyed thousands of homes and other structures. Early estimates put the cost of damage at $10 billion, but experts said that number would grow. The total estimated economic loss caused by the January wildfires in Southern Califronia has surpassed $250 billion.
Southern California Edison, based in Rosemead, is an investor-owned public utility that provides electricity to about 15 million people across a 50,000-square-mile area in Southern California. Along with the utility, which is one of the largest in the country, Edison International owns an energy advisory company, Trio.
In all, Edison International employs more than 14,000 people and had a valuation of around $30 billion before January’s wildfires. The company’s valuation closed Tuesday at $22.6 billion.
If Edison has to cover the damage caused by the Eaton fire, the utility will be partially protected by an emergency fund that state lawmakers created in 2019 in the wake of earlier wildfires. The fund is designed to protect utility companies from bankruptcy in the event that the utility is found responsible for a wildfire and has to make a large payout.
Video of flames at the base of an Edison transmission tower in Eaton Canyon on the night the fire began raised suspicions that the utility’s equipment was at fault. Just months before the fire sparked, state utility safety regulators raised questions about Southern California Edison’s maintenance of aging transmission lines, The Times reported. Edison’s equipment sparked 178 fires in 2024.
State regulators criticized Southern California Edison for falling behind in inspecting transmission lines in areas at high risk of wildfires just months before the deadly Eaton fire, according to state documents.
“Unlike when we were dealing with TKM and Woolsey, we have the wildfire fund that we will be accessing,” Edison International Chief Financial Officer Maria Rigatti said on Tuesday, referring to previous wildfires tied to Edison’s equipment.
The emergency fund is supposed to cover up to $21 billion in damages on behalf of a utility company but had amassed only $14.7 billion as of December 2024.
Under state law, a utility does not have to reimburse the wildfire fund after using it to cover damages if a review finds it acted prudently to prevent a fire, such as by shutting down power to transmission lines amid high winds. But if Edison is found to have been imprudent, it will have to pay back $4 billion to the fund.
“Based on everything we know today and the information that we’ve reviewed, we believe that Southern California Edison will make a good-faith showing that it was prudent,” Rigatti said.
On Tuesday, Edison International reported first-quarter net income of $1.4 billion and earnings per share of $1.37, up from $1.13 a year earlier.
Shares closed at $58.73 on Tuesday, about half a percent higher and down 26% so far this year.
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.
