Edison CEO Warns Wildfire Reform Delay Into 2027 Will Be Costly; CFO Estimates $300 Million in Added Bond Costs

Edison International's third-quarter call on Thursday, Oct. 29, was mostly about a bill that does not exist yet.

CEO Pedro Pizarro told investors that wildfire liability reform should include "a clear and durable liquidity source for funding claims resolution, and a true shareholder liability cap that is not connected to the Wildfire Fund." He warned that if the effort fails in 2026, "delay into 2027 will have significant and costly consequences."

CFO Aaron Moss put a number on it. Elevated credit spreads, he said, could cost customers an incremental $300 million over the life of the bonds Southern California Edison expects to issue in 2027 alone.

The quarter

Edison International reported third-quarter core EPS of $1.92, down from $2.34 a year earlier. Management attributed SCE's decline mainly to earnings recognized in the third quarter of 2025 when the 2025 General Rate Case decision was implemented.

Operating revenue was $4.886 billion, versus $5.750 billion a year earlier. GAAP EPS was $1.88, compared with $2.16. Net income available to common shareholders was $724 million, down from $832 million.

The company reaffirmed 2026 core EPS guidance of $5.90 to $6.20, with management leaning toward the middle of that range. It also kept its 5% to 7% annual core EPS growth target through 2030. The capital plan for 2026 through 2030 is roughly $38 billion to $41 billion.

On the ground, SCE says it has hardened about 90% of its distribution system in high fire risk areas and installed more than 7,200 miles of covered conductor.

Eaton Fire exposure

Edison's quarterly SEC filing lists around 2,000 lawsuits from 38,000 plaintiffs over the January 2025 Eaton Fire. They include individuals, insurers pursuing subrogation, and public entities.

As of Sept. 30, SCE had recorded $1.8 billion in losses tied to Eaton Fire settlements. It has also recorded expected recoveries of $917 million from customer-funded self-insurance, $859 million from the Wildfire Fund, and $70 million through FERC electric rates.

SCE says it cannot reasonably estimate the full range of Eaton Fire losses. It has extended more than 3,200 offers worth about $1.1 billion through its Wildfire Recovery Compensation Program.

County fire-investigation reports concluded that SCE equipment caused the ignition. SCE says it is still analyzing them and that an ignition finding does not settle liability, prudence, or Wildfire Fund reimbursement.

Judge keeps inverse condemnation alive

This week, Superior Court Judge Laura Seigle denied SCE's request to rule out inverse condemnation. That is the California doctrine making utilities liable for property damage from their equipment regardless of negligence.

An initial trial on the question is set for late January. Lawyers for insurers also lost their bid to win the issue without a trial.

SCE had argued that the transmission tower where the fire allegedly started had been idle since 1971 and no longer counts as public infrastructure. Seigle wrote that "Edison did not cite any legal authority that a transmission line originally built to serve the public cannot be a public improvement because it was idle."

SCE spokesman David Eisenhauer said the utility disagrees with the ruling. He urged those affected to file through the compensation program "rather than pursuing lengthy and uncertain litigation."

The Los Angeles County Fire Department concluded in early August that electrical arcing on an out-of-service tower caused the fire, which killed 19 people and destroyed or damaged more than 9,000 homes and businesses. Lawyers suing Edison allege a Jan. 7 surge on a nearby active line briefly reenergized the dormant cable. Pizarro told investors in late July that no other viable alternatives to company equipment have appeared.

Sacramento stalls

In September, the Legislature did not advance Gov. Gavin Newsom's proposal to limit utility liability. Edison's stock fell 23% after the news. The session ended without a final vote, though Assembly Speaker Robert Rivas said work would continue.

Newsom settled for Senate Bill 492, which caps fees for attorneys representing insurers, blocks speculators from trading insurance claims, and speeds payments to fire victims. He has urged lawmakers to revisit the larger issue after he leaves office in January.

Newsom's argument is that full utility liability pushes up power bills, already among the nation's highest, and makes it harder for utilities to borrow and attract investors. Consumer Watchdog, among the loudest opponents, objects to the approach. CalMatters columnist Dan Walters wrote that Newsom's plan would have made wildfire victims and their insurers shoulder larger shares of the burden. Consumer Watchdog President Jamie Court has also called PG&E's announcement that it would stall new power hookups until the issue is settled "bailout blackmail."

PG&E CEO Patti Poppe told analysts last week she is optimistic that Assembly Utilities and Energy Committee hearings and a CPUC report will make the case for Newsom's approach. Consumer Watchdog read her remarks as a sign of movement toward a special session. No special session has been called.

Pizarro said "other pieces may be needed" to build a package that can win support in the Senate, the Assembly, and the governor's office by a Nov. 15 constitutional deadline.

Pizarro also warned that a downgrade of Edison's credit rating below investment grade "would add further costs at a time when affordability is paramount for customers."

The CPUC report is due Monday, Nov. 2, ahead of the Nov. 3 election. The Eaton Fire inverse condemnation trial follows in late January.

Whether lawmakers act before Nov. 15, or hand the fight to a new governor and Legislature, remains to be seen.