CEO: Edison International Will Probably Take ‘Material Losses’ Due to Eaton Fire
Unless new evidence emerges about how the Eaton Fire in Los Angeles started earlier this year, Southern California Edison and parent company Edison International Inc. are likely to incur “material losses,” Edison President and CEO Pedro Pizarro said earlier this week.
Speaking to analysts and investors after Edison reported a first-quarter adjusted profit of $528 million on operating revenue of $3.8 billion, Pizarro said company officials and other investigators have made progress of late on the investigation into the Eaton fire, which burned more than 14,000 acres and killed 18 people in January. Soon after the fire was brought under control, a problem with an idle SCE line in the area was circled as a possible cause.
“There’s certainly a lot of a number of pieces of circumstantial facts, but importantly, we also are not finding another likely hypothesis for the cause of the fire,” Pizarro said on a conference call. “When you combine those two elements, it felt appropriate to, in this quarter, make the disclosure about this being a probable event.”
Pizarro and other company leaders have steadfastly said they have prudently operated the company’s network during the January fires and don’t expect to be found to have acted negligently. As such, Edison executives expect to be able to tap California’s Wildfire Insurance Fund to recover claims costs from the event after they pony up the first $1 billion.
The Wildfire Insurance Fund today has the capacity to cover $21 billion of claims. Pizarro told analysts it’s still “very early days” when it comes to estimating the potential damages that will come from the Eaton fire.
The SCE team two weeks ago delivered its plan to rebuild the company’s infrastructure in the Altadena and Malibu areas of Los Angeles, outlining a cost of $860 million to $925 million. Among other things, the plan calls for 130 circuit miles to be buried in the area, with another 19 miles possible for Altadena.
Shares of Edison (Ticker: EIX) fell nearly 9% on the heels of the earnings report and conference call and have since recovered somewhat. Over the past six months, the stock is down more than 30%, a slide that has cut the company’s market capitalization to about $21 billion.
