Southern California Edison (SCE) and the holders of Woolsey Fire insurance subrogation claims have entered into an agreement settling all subrogation claims in the pending litigation arising from the 2018 Woolsey Fire. SCE has also reached settlements with approximately 1000 individual plaintiffs in litigation arising from the 2017/2018 Wildfire/Mudslide Events, which include the Woolsey Fire, the 2017 Thomas and Koenigstein fires, and the 2018 Montecito Mudslides (TKM). No admission of wrongdoing or liability was made in reaching these settlements.
Under the settlement, subrogation plaintiffs will receive US$2.2 billion within 90 days for claims based on payments they have already made to individual and business policyholders associated with the Woolsey Fire. The SCE will pay additional amounts for claims arising from future payments that may be made to policyholders on or prior to July 15, 2023, up to an agreed-upon cap.
"We have made another significant step toward resolving pending wildfire-related litigation," said Pedro J. Pizarro, president and CEO of Edison International, parent company of the SCE. "This settlement is with all insurance subrogation plaintiffs in the 2018 Woolsey Fire litigation. Combined with the settlement announced on Sept. 23, 2020, in the TKM litigation, the SCE has resolved all subrogation plaintiff claims for the 2017/2018 Wildfire/Mudslide Events. The company continues to explore reasonable settlement opportunities with other parties."
After consideration of the settlement and other available information, the SCE's best estimate of total losses accrued for the 2017/2018 Wildfire/Mudslide Events remains unchanged. As of Sept. 30, 2020, the SCE's best estimate of expected potential losses was US$4.6 billion. This estimate does not include any potential fines and penalties. This amount will be reduced by the initial US$2.2 billion to be paid under the settlement. The SCE has approximately US$700 million remaining in expected recoveries from insurance for the Woolsey Fire litigation. The company expects that this insurance will be exhausted after expected recoveries for the settlement.
Timing differences between payments to the subrogation plaintiffs and reimbursement by insurance will be financed by the SCE, with short-term debt supported by its existing credit facilities.
Consistent with the company's update on its third-quarter 2020 earnings call, Edison International anticipates issuing approximately US$1 billion of equity to invest in the SCE to enable the utility to debt-finance claims payments and maintain investment-grade credit ratings.
The SCE will seek to recover uninsured costs resulting from the 2017/2018 Wildfire/Mudslide Events through electric rates. Recovery of these costs is subject to approval by regulators.
The company also made an 8-K filing that can be accessed here.