Edison International executives used the company's third-quarter earnings call to deliver a forceful public argument that California's wildfire financing regime must shift away from placing the burden primarily on utility customers and shareholders toward a state-backed insurance and funding scheme.
Pedro Pizarro, president and CEO, praised California's newly enacted SB 254, calling it "a constructive and important step to support IOU customers, address wildfire risk and boost the financial stability of the state's investor-owned utilities."
The bill establishes an up to $18 billion continuation account, jointly funded by utilities and customers, and (critically) shifts the liability cap to the year of ignition rather than the year of "CPUC disallowance."
Traditionally, the California Public Utilities Commission (CPUC) formally reviews a wildfire incident and decides how much of the related costs the utility is not allowed to recover from customers.
Edison made clear the more profound development regarding utility wildfire liability is political, not technical.
"It was very encouraging to see the legislature acknowledge right upfront in the preamble of SB 254 that the current process of essentially making utility customers and utility shareholders the insurers of a catastrophe is simply not sustainable," he told analysts.
Edison emphasized that language throughout the call as the starting point for Phase 2 legislative reform, due for delivery in April 2026 and led by the California Earthquake Authority (CEA). The company emphasized the process will be fully public.
"They have said already that they plan to make all of those submissions, both the abstracts and the papers public as they come in," Pizarro said. "We expect that there's a potential here for taking action across the economy. This is not just about utility connections to wildfire… we simply can't have utility customer shareholders continue to be the insurers of this catastrophic risk."
Pizarro warned that even if SCE equipment is eventually linked to the ongoing Eaton Fire, the catastrophe was driven by "extreme weather, the 100-mile-an-hour winds, the grounding of firefighting aircraft," as well as "homes not ready for this high fire risk" and "the lack of evacuation notices."
Liability Mechanics Now "Clear" Under SB 254
CFO Maria Rigatti made the new economics explicit, adding that they were investor-friendly.
"We know with clarity what the cap is for Eaton, which is approximately $4 billion based on our current rate base," she said.
Rigatti explained that for fires ignited between January 1 and September 19, 2025—the precise window for Eaton—Edison can securitize wildfire claims before undergoing a prudency review. She added that the company "wouldn't need to issue any debt at that point or equity to fund the claims payments."
Ratings agencies have already responded. Moody's affirmed its stable outlook. Fitch removed its negative watch. Only S&P downgraded Edison one notch.
Edison executives underscored that wildfire mitigation remains a massive capital priority.
Rigatti added that capital continues to grow, but SB 254 clarifies which components do not earn equity return, a first for investors anticipating wildfire mitigation spend.
