Southern California Edison increased the number of Eaton fire victims that are eligible to file claims for damages in its final compensation proposal, though some Altadena residents say the utility’s program still falls short.
After talking to residents about the plan it released in July, Edison said it decided to expand the area of homes that are eligible for compensation for smoke damage.
“Expanding the eligibility area is one of the most significant updates made as a result of feedback,” said Pedro Pizarro, the chief executive of Edison International, the utility’s parent company. “The number of qualified properties nearly doubled for those with damage from smoke, soot or ash.”
The utility also increased the amount of compensation it is offering for some victims. For example, each child in a family that lost its home will be eligible to receive $75,000 for pain and suffering, up from $50,000 in the initial plan.
To receive payments under the utility’s Wildfire Recovery Compensation Program, families must agree to drop any lawsuits they filed against the utility for the Jan. 7 fire.
The program also is open to businesses that lost revenues and renters who lost property. And it covers those who suffered physical injuries or had family members who died.
Edison is launching the victim compensation program even though government fire investigators have not released their report on the cause of the fire. The inferno swept through Altadena, destroying 9,400 homes and other structures and killing 19 people.
Videos captured the fire igniting under a century-old transmission line in Eaton Canyon that Edison had not used since 1971, and Pizarro has said a leading theory is that the line somehow re-energized and ignited the blaze. Edison said in a federal securities filing this week that “absent additional evidence, SCE believes that it is likely that its equipment could be found to have been associated with the ignition.”
In documents detailing its final compensation plan, the utility included the example of a family of four with a 1,500-square-foot home that was destroyed. The family would receive $900,000 to rebuild, $360,000 for personal property, $140,000 for loss of use and $380,000 for pain and suffering. It also would receive a $200,000 “direct claim premium” for agreeing to settle outside of court.
That total of $1,980,000 is then reduced by the family’s $1 million of insurance coverage, according to the company’s example.
On Thursday, state Sen. Sasha Renée Pérez (D-Pasadena) sent a letter to Edison saying she was concerned about how the utility was requiring victims to waive their future legal rights in order to get compensation. And she called on Edison to provide immediate housing assistance to fire victims.
“Having acknowledged its potential role in starting the Eaton Fire, Edison must do everything within its power to prioritize the needs of survivors and make this commitment a core part of its corporate duty,” she wrote to Pizarro. “This means ensuring fire victims can recover and rebuild their lives with the support they are owed.”
Edison expects to be reimbursed for most or all of the payments it makes to victims by a $21-billion state wildfire fund that Gov. Gavin Newsom and lawmakers created in 2019 to shield utilities from bankruptcy. Administrators of the wildfire fund told members of the state Catastrophe Response Council this week that they expect Eaton fire claims “to be in the tens of billions of dollars.”
In September, Newsom signed a bill that will bolster the money available by another $18 billion for future wildfires. Under that bill, Edison is allowed to raise electric rates for any Eaton fire costs that exceed the original $21-billion fund.
Some Eaton fire survivors told the council, which oversees the wildfire fund, that Edison’s program fails to fully cover damages suffered by victims. Joy Chen, executive director of the Eaton Fire Survivors Network, recently sent the council a report detailing where her group found shortfalls. For example, Chen said, Edison is deducting a homeowner’s full insurance coverage from the compensation amounts even if the insurer has reimbursed the family for only part of that amount.
“Nine months after Edison’s negligence shattered our lives, the toll is clear,” the group’s report states. “Many have drained retirement savings, maxed out credit cards, or watched marriages and health deteriorate under the strain. “
“You destroyed our homes, lives and community,” the report says of Edison. “Fix what you broke. “
Chen’s group joined with Perez in calling for Edison to provide emergency housing assistance for victims.
Edison said its program is designed “to help the community recover and rebuild faster.” The utility said a report by RAND, the non-profit research group it hired to assess the compensation plan, determined the payment amounts “used modern statistical methods and in our judgment were thoughtfully done and well executed.”
Edison said victims can start filing for claims now and that it expects to get back to them with an offer within 90 days.
Gov. Gavin Newsom is preparing draft legislation that would add an additional $18 billion to a state fund for wildfire victims that officials have warned could be exhausted by January’s deadly Eaton wildfire.
Under Newsom’s plan, customers of the state’s three biggest for-profit utilities would pay another $9 billion to supplement a state fund created in 2019 that holds $21 billion.
The other $9 billion would come from shareholders of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, according to a draft of the proposal.
“We continue to work with the Legislature on policy that will stabilize California’s Wildfire Fund to support the recovery of wildfire survivors and to protect California utility consumers — even as wildfires become bigger and more destructive due to climate change,” Newsom’s office said in a statement Thursday.
Customers of the three utilities are already on the hook for contributing half of the original $21 billion fund through a surcharge of about $3 on their monthly bill. The proposal would have customers pay $9 billion more by extending that surcharge by 10 years beyond 2035, when it was set to expire.
“We’re very disappointed to be at a point where there is even talk of more ratepayer money going to the wildfire fund,” said Mark Toney, executive director of the the Utility Reform Network, a consumer advocacy group.
Utility executives also criticized the plan, which was reported earlier by Bloomberg, for proposing that their shareholders pay additional amounts into the fund.
Pedro Pizarro, chief executive of Edison International, told Wall Street analysts on a conference call that the company has told Newsom and lawmakers that any legislation to shore up the fund “would not have a shareholder contribution.”
“We will need to see the balance of an ultimate package,” Pizarro said.
Newsom’s plan has been circulating with legislative leaders and others and would require approval of the state Senate and Assembly. Under the draft proposal, the $18 billion would go into a new “Continuation Wildfire Fund.” The new fund would not be created until the administrator of the state’s original wildfire fund determines additional funds are needed.
Newsom and lawmakers created the $21 billion fund in 2019 to protect utilities from bankruptcy in the event their equipment sparks a devastating fire.
Toney said said state officials told him then that there was a 99% chance the fund would last 20 years. Now it could be wiped out by a single fire.
He said he believes there needs to be limits on the liabilities that the fund will pay for. “We can’t go back every three or four years and put more money in,” he said.
Since the fund was created, electric customers have also paid $27 billion for tree trimming and other work aimed to prevent wildfires, which is fast driving up electric bills, Toney said.
The investigation into the Eaton fire, which killed 19 people and destroyed thousands of homes and businesses in Altadena, is continuing. Video captured the fire igniting on Jan. 7 under an Edison transmission tower.
Pizarro has said a leading theory is that a dormant Edison transmission line, not used since 1971, somehow became electrified and sparked the blaze.
The insured property losses alone could be as much as $15.2 billion, according to an estimate released by state officials last week. That amount does not include uninsured losses or damages beyond those to property, such as wrongful death claims. A study by UCLA estimated losses at $24 billion to $45 billion.
More than 30 million Californians across the state could see their electric bills go up to pay for the devastating Eaton fire, as officials scramble to shore up a state wildfire fund that could be wiped out by damage claims.
One early estimate places fire losses from the Eaton fire at $24 billion to $45 billion. If Southern California Edison equipment is found to have sparked the blaze on Jan. 7, as dozens of lawsuits allege, the damage claims could quickly exhaust the state’s $21-billion wildfire fund.
“Everyone is concerned about this,” said Michael Wara, director of Stanford’s climate and energy policy program, who was involved in the fund’s creation. “If we need to put more money into the fund, where will it come from?”
The wildfire fund was created to shield the state’s three big utilities from bankruptcy in the event one was found liable for massive fire damages.
At a meeting last month, members of the state Catastrophe Response Council, which oversees the fund, were told that Gov. Gavin Newsom and legislative leaders were being urged to extend a monthly surcharge on electric bills beyond its planned expiration in 2035. The fee, called the non-bypassable charge, adds roughly $3 a month to the average residential bill.
“They are asking the people of California to put more money into the fund,” said council member Paul Rosenstiel, a former investment banker and Newsom advisor, according to a transcript of the meeting. “Some of them are asking for an extension of the non-bypassable charge.”
The fee is paid by customers of the state’s three big for-profit utilities — Edison, Pacific Gas & Electric and San Diego Gas & Electric.
Rosenstiel didn’t respond to a request for comment. At the meeting, he didn’t say who was lobbying the governor and lawmakers to extend the surcharge to ratepayers.
California utility executives have told their investors they have been talking to Newsom and legislative leaders about shoring up the fund. PG&E executives have said that they have asked that no new money come from utilities or their shareholders, which would likely leave electric customers to pay more.
“We continue to advocate that we don’t think there is a good case that investors should contribute to the fund,” Patti Poppe, PG&E’s chief executive, told Wall Street analysts in an April conference call.
A Siller Skycrane removes Southern California Edison’s tower 208 from a hillside in Altadena in May. The idle transmission tower, suspected of sparking the Eaton fire, will be examined at a lab.
(Myung J. Chun/Los Angeles Times)
Pedro Pizarro, chief executive of SoCal Edison’s parent company Edison International, was asked in a recent call with Wall Street analysts about the prospects for legislation that would bolster the wildfire fund.
“Clearly the governor’s office is engaged, as are our legislative leaders,” he said, adding that he was “certainly very encouraged by the level of diligence and engagement that I’m seeing.”
Asked to elaborate, Kathleen Dunleavy, a SoCal Edison spokeswoman, said the utility was not seeking a specific solution to questions of the fund’s durability.
“Our focus is to convey the importance of a strong wildfire fund,” she said. “We are not being prescriptive in how to achieve that.”
This year, the electric bill surcharge is expected to add $923 million to the fund, according to California Public Utility Commission records. If the fee was extended an additional 10 years, it would require customers of the three utilities to pay an additional $9 billion into the fund.
That doesn’t sit well with consumer advocates, who point out customers are already on the hook to contribute half of the $21-billion fund, while also paying higher bills to cover costs such as undergrounding and insulated electric wires.
Those measures are intended to make the electric system safer. Yet despite spending billions of dollars last year on wildfire mitigation, the number of fires sparked by its equipment jumped from 90 in 2023 to 178 last year.
Altadena homes lie in ruins after the Eaton fire.
(Robert Gauthier/Los Angeles Times)
“We think ratepayers have more than done enough,” said Mark Toney, the executive director of The Utility Reform Network, also known as TURN, a consumer group in San Francisco. “My position is that ratepayers should not pay another penny.”
Rosenstiel said at the May meeting that Newsom and legislative leaders were also being asked for the state’s general fund, which pays for schools, healthcare, prisons and other government operations, to contribute to the fund that protects utilities from wildfire claims.
The governor’s office declined to answer questions and said Newsom’s schedule didn’t allow time for an interview.
Newsom has a seat on the Catastrophe Response Council. He was a no-show at the group’s most recent meeting, sending a designee in his place.
Assemblywoman Cottie Petrie-Norris (D-Irvine), the chair of the Assembly’s Utilities and Energy Committee, acknowledged that lawmakers are concerned about the fund but said that they are still considering remedies.
“All options are on the table and are being considered and evaluated,” she said. “I have certainly not arrived at a solution yet.”
The cause of the Eaton fire, which killed 18 people and destroyed more than 9,000 homes, businesses and other structures in Altadena, remains under investigation.
Edison CEO Pizarro has said a leading theory is that an unused, decades-old transmission line in Eaton Canyon was reenergized and sparked the blaze. Video captured flames erupting under an Edison transmission tower on the night of the fire.
If Edison’s equipment is found to have started the inferno, the state’s wildfire fund is expected to cover most of the cost of damages over $1 billion, under a 2019 law that was passed after PG&E went bankrupt from its liability for the deadly 2018 Camp fire.
The first $1 billion in damages from the Eaton fire would be covered by insurance that electric customers paid for.
The total cost of the fire in Altadena won’t be known until dozens of lawsuits make their way through the courts, which could take years.
A February study by UCLA economists Zhiyun Li and William Yu estimated that the fire caused $24 billion to $45 billion in property damages and capital losses, or the cost to replace what was destroyed.
Officials at the California Earthquake Authority, which manages the wildfire fund, told members of the Catastrophe Response Council in a May memorandum that the authority had “undertaken a significant project to evaluate alternatives for extending the durability of the Wildfire Fund in the face of potential large losses.”
To determine how to strengthen the fund, authority officials said they had rehired consultants who worked with Newsom’s office in 2019 to create the fund. The four firms will be paid $4.5 million, which the fund will cover, they said.
Among the consultants is Guggenheim Securities, the investment banking arm of Guggenheim Partners. Another subsidiary of Guggenheim Partners owns stock in the state’s three big utilities.
A recommendation to tap utility customers to replenish the fund, instead of the utility companies themselves, would likely have a big impact on company share prices.
“They [Guggenheim] certainly have a vested interest in the financial success of the utilities,” Toney said.
A spokesman for Guggenheim Securities said the stocks owned by the sister company didn’t pose a conflict, saying it “maintains a robust conflict management program, including strict information barriers between its investment banking department and the rest of Guggenheim Partners.”
Wara at Stanford said if Edison is found responsible for the Eaton fire, the wildfire fund would cover what insurers paid to victims and also pay for property damage not covered by insurance.
For example, families who lost their homes but received insurance payouts lower than the value of their property could seek the balance from Edison, he said. The utility would then seek to recover those sums from the wildfire fund.
The other deadly Los Angeles County inferno that ignited on Jan. 7, the Palisades fire, is not covered by the wildfire fund because Pacific Palisades is served by the Los Angeles Department of Water & Power, a municipal utility. The fund only covers blazes ignited by equipment owned by the state’s three biggest investor-owned utilities.
“They have their insurance and that’s it,” Wara said of Palisades fire victims.
At its meeting last month, the state Catastrophe Response Council was informed that insurance claims from the Eaton fire have totaled roughly $15 billion so far.
Adding to the damage bill is the potential cost of lawsuits. The possibility that the fund will pay out large amounts for Eaton fire damages has led to dozens of lawsuits being filed against Edison, even before the official cause has been determined.
Families of Altadena residents who died have filed wrongful-death suits. Edison is also facing lawsuits from L.A. County and other local governments for damages, including to public infrastructure such as water systems. Residents living outside the fire’s borders have filed suit, saying they were harmed by lead and other toxins in the smoke.
If a court found Edison negligent in maintaining its equipment, Wara said, victims could ask for compensation for pain and suffering, which would escalate the cost.
“Then the wildfire fund is out of money,” Wara said.
Pizarro has said that Edison is “committed to a thorough and transparent investigation.”
“Our hearts go out to everyone who has suffered losses,” he said.
The 2019 law that created the wildfire fund, known as AB 1054, greatly limited what Edison would have to pay for any of the claims. The company has told its investors that its maximum liability would be $3.9 billion.
The three utilities are asking legislators to ensure that state law continues to protect them and their shareholders, even if the $21-billion fund runs out of money.
Since the January fires, Edison, PG&E and Sempra, the parent company of San Diego Gas & Electric, have each spent hundreds of thousands of dollars to lobby in Sacramento, according to required regulatory reports they filed for the first three months of the year.
A PG&E lobbyist reported taking Assemblywoman Petrie-Norris to a $267 dinner at Paragary’s, a bistro in Sacramento, on Feb. 3.
Petrie-Norris said the dinner was with Carla Peterman, a former state public utilities commissioner who is now a top PG&E executive. Petrie-Norris said they talked about a planned March hearing on electricity affordability and didn’t discuss the wildfire fund.
The next month, a PG&E lobbyist took Dee Dee Myers and Rohimah Moly, two of Newsom’s top staff members, to the upscale Prelude Kitchen & Bar, which is a short walk from the state Capitol.
Willie Rudman, a spokesman for the Governor’s Office of Business and Economic Development, said the wildfire fund wasn’t discussed at the meal. Instead it “was a general meet and greet,” Rudman said, where the governor’s staff and PG&E executives “discussed opportunities for future collaboration.”
PG&E declined to answer questions. Lynsey Paulo, a PG&E spokesperson, said in a statement that the utility’s lobbying expenses were paid with shareholder funds and not money from customers.
“Like many individuals and businesses, PG&E participates in the political process on behalf of our customers and company,” Paulo said.
