Edison International CEO Says Lawmakers Need to Respond Quickly to Wildfire Fund Worries
Edison International Inc. President and CEO Pedro Pizarro said Feb. 27 his team is looking for California lawmakers to quickly respond to concerns that the state’s Wildfire Insurance Fund won’t be able to absorb the next major conflagration.
Speaking after Edison International, the parent of Southern California Edison, reported its fourth-quarter results seven weeks after several fires began to spread in the Los Angeles area, Pizarro said he and other executives have been in regular talks with their utility peers as well as the office of Gov. Gavin Newsom and Golden State legislators. Their main goal, he told analysts on a conference call, is to convey that investors are anxious about another wildfire wiping out the company as well as the insurance fund and residents’ and businesses’ property.
The Wildfire Insurance Fund was launched in 2020 and is funded both by $10.5 billion in contributions from SoCal Edison, Pacific Gas & Electric and San Diego Gas & Electric as well as $900 million annually from California customers. Today, it would be able to pay out about $21 billion in claims. Earlier this month, Morgan Stanley analysts estimated that the L.A. fires could claim as much as $13.5 billion of that total.
Pizarro said January’s Los Angeles fires—which included the Eaton Fire that Edison executives say their equipment may have helped cause—have led investors and other stakeholders to reassess just how large future large events in California could be. As a result, they’ve begun questioning whether the insurance fund is large enough, whether its liability caps should be adjusted or whether other measures. In the meantime, investors have cut more than a third of the market value from Edison’s shares while those of PG&E have fallen about 20% since early this year.
On the conference call, Pizarro said he is confident lawmakers “will make the enhancements needed” to the insurance fund. While saying it’s still too early in the process to get into specifics as to what those could be, he also pointed out to early legislative efforts around insurance reform more broadly as well as building codes and the state’s work on firefighting and forest fuel management.
In short, it’s something of a full-court press and Edison’s leaders are helping apply the pressure.
“We want to make sure we have a strong voice in helping them understand the immediacy … of the need to reassure investors,” he said.
Pizarro’s comments echo those made earlier this month by Patti Poppe, his peer at PG&E. After her team reported Q4 results, Poppe said coming up with solutions quickly is key for the utilities to continue to attract capital to invest in safety and infrastructure improvements.
“There are simple things that can be done to the fund—as simple as extending the customer payment over a longer period of time to more complex things that includes other parties,” Poppe said Feb. 13. “All of those things will be considered. And we’ll be standing for the best outcome for those who have suffered loss.”
Edison posted a net profit of nearly $1.3 billion on revenue of $17.6 billion in the last three months of 2024, increases from $1.2 billion and $16.3 billion, respectively, in late 2023. Pizarro and his team are projecting that the company’s rate base will grow between 6% and 8% annually through 2028 and that its core earnings will grow 5% to 7%.
Shares of Edison (Ticker: EIX) were down slightly to $51.25 in after-hours trading following the company’s earnings report. Following their slide so far this year, Edison’s market capitalization now stands at about $20 billion.
