Edison takes $1.8B charge for California wildfires, despite no new liability determination
- Edison International, the parent company of Southern California Edison, on Thursday announced it would take a $1.8 billion charge in the fourth quarter related to wildfire claims. The utility posted a fourth quarter 2018 net loss of $1.4 billion, or $4.39 a share.
- California utilities have struggled to deal with the state's devastating wildfires and have faced mounting liabilities in instances where their equipment was at fault.On Thursday, in its 2018 annual earnings, Pacific Gas& Electric recorded a $10.5 billion charge related to Camp Fire and a $1 billion charge related to 2017 wildfires in Northern California.
- Aside from the wildfire charge, Edison officials told analysts that a comparison of year-over-year results is "not particularly meaningful" because SCE is still waiting on a decision in its 2018 General Rate Case.
Once the California Public Utilities Commission makes a decision on SCE's general rate case, that revenue requirement ultimately will be retroactive to Jan. 1, 2018. While that makes financial comparisons tricky, Edison officials say the wildfire charge is more clear.
"Comparison of year-over-year results is not particularly meaningful," Pedro Pizarro, president and CEO of Edison International, told analysts yesterday in a conference call. Asked why Edison had opted to go ahead and take the charge, absent any new determination of liability, he said the utility is "looking at the totality."
"Not only the events themselves or continuing internal evaluation of the facts, but we're also looking at the number of claims that are being filed, the potential for litigation, litigation history in similar cases," Pizarro said. "And so when you put it all that together, we determine that we face a potential material liability here and under the accounting rules we felt that it was appropriate to disclose that."
"We're confident in our ability to access our $2 billion through our insurance policies," the CEO added. He said the company is working with state, county and municipal leaders to "address the ongoing wildfire risk."
State regulators will assess fire mitigation plans utilities are developing to comply with SB 901, a 2018 law to address wildfire risk that added new requirements to utilities' fire plans. Technical workshops and a pre-hearing conference were held this week at the California Public Utilities Commission, kicking off a review of utility wildfire plans that are expected to be approved in May.
- Edison International Edison International Reports Fourth Quarter and Full-Year 2018 Results
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