The three investor-owned electric utilities active in California—Edison International Inc., PG&E Corp. and Sempra—will in 2029 start to pay a combined $300 million per year into a new wildfire insurance fund, per a bill passed late last week by Golden State legislators.
The new fund, which will cover claims from fires that start after the bill’s passage, builds on an existing $21 billion pool that many experts fear will be depleted by claims from January’s devastating Los Angeles-area fires. The new fund will grow to $18 billion, be split evenly between the three companies and their customers, and run through 2045. (Ratepayers will pay an aggregate of $900 million per year starting in 2036.)
The utilities’ total contribution from 2029 until 2045 will total $5.1 billion. The fund administrator also has the option to call on them to pay another $3.9 billion if needed. Both Edison International, the parent of Southern California Edison, and Pacific Gas & Electric owner PG&E will pay $145 million annually while Sempra, which owns San Diego Gas & Electric, will pitch in $10 million per year.
In a note to investors, Edison International executives said the passage of the new fund “is a key action that demonstrates support for [investor-owned utilities’] financial stability and its importance for customer affordability.” They also pointed to the new fund’s feature that its liability cap is based on the year of ignition.
The new fund gives the publicly traded utilities something Edison President and CEO Pedro Pizarro and Patti Poppe, his PG&E counterpart, said last month they wanted: Their shareholders will not be called on to pay large sums into the fund up front.
Carol Levenson, director of research at GimmeCredit, said the new insurance fund reduces the financial risks to the three utilities “in important ways” and “in a financially manageable fashion” and said it is likely to be positive for the debt ratings of Edison. The only negative, she added in a Sept. 15 note, is that Edison’s contribution has been raised to the same level as PG&E’s. The latter had borne a far larger share of the existing $21 billion fund, which was created a year after the 2018 Camp Fire.
