SCE to inspect Eaton Canyon electrical gear after fires

ROSEMEAD, Calif. - Southern California Edison (SCE), a subsidiary of Edison International (NYSE: EIX), is set to commence a detailed inspection and testing phase of electrical equipment in Eaton Canyon starting March 17, following the January 2025 wildfires. The $21.9 billion market cap utility company, which generated $17.6 billion in revenue over the last twelve months, faces this new phase of inspections amid challenging market conditions. According to InvestingPro analysis, the company operates with a significant debt burden, though analysts remain optimistic with 5 upward earnings revisions for the upcoming period. This new phase includes climbing examinations, resistance testing, and additional drone inspections, with the goal of assessing the condition of the electrical infrastructure in the area.

The inspections, which will extend over several weeks, represent SCE’s first close-up physical review of the equipment since the Eaton Fire. The company has already conducted preliminary visual inspections using drones, helicopters, and ground crews once the areas were deemed safe.

SCE’s inspection protocols have been established through collaboration with various stakeholders, including fire investigators, Los Angeles County, the cities of Pasadena and Sierra Madre, and plaintiffs’ counsel, ensuring transparency and thoroughness in the investigation process.

The upcoming inspections will involve SCE crews climbing towers for in-person inspections and photography, performing resistance and soil resistivity testing, and conducting additional drone surveillance to gather detailed visual data. The collected information will then undergo lab and engineering analysis.

While SCE does not expect to provide immediate updates following the inspections, the full investigation is anticipated to take several months. The company will proceed with a comprehensive data review in coordination with third-party experts.

In response to the Eaton and Palisades fires, SCE has been actively rebuilding the electrical system, focusing on resilience and safety. Efforts include setting over 1,860 poles, installing more than 690 transformers, and stringing approximately 724,075 feet of power lines. Despite recent challenges that led to a 33% stock decline over the past six months, SCE is maintaining its commitment to infrastructure improvement while continuing its 22-year streak of consistent dividend payments, currently yielding 5.93%. SCE is also replacing damaged equipment with fire-resistant materials and expediting undergrounding projects in specific areas.

Edison International, SCE’s parent company, is a major electric utility holding firm dedicated to delivering clean and reliable energy across Southern, Central, and Coastal California. The company maintains a Fair Value rating from InvestingPro, with a financial health score of 2.46 out of 5. For detailed insights into Edison International’s valuation, growth prospects, and 8 additional exclusive ProTips, investors can access the comprehensive Pro Research Report, available to InvestingPro subscribers.

This report is based on a press release statement from Edison International.

In other recent news, Edison International reported its fourth-quarter earnings for 2024, revealing an earnings per share (EPS) of $1.05, which fell short of the $1.08 forecast by analysts. The company also announced a revenue of $3.86 billion, while maintaining confidence in its EPS guidance for 2025, projecting a range of $5.94 to $6.34. Meanwhile, Edison International and its subsidiary, Southern California Edison, are facing lawsuits from several public entities, including the County of Los Angeles and the City of Pasadena, over their alleged role in sparking the Eaton fire, a significant wildfire in California. The lawsuits aim to secure compensation for damages to public resources and infrastructure, with projected losses potentially reaching hundreds of millions of dollars.

Additionally, Mizuho Securities adjusted its outlook on Edison International, reducing the price target from $75 to $66 while maintaining an Outperform rating on the stock. The adjustment reflects the current market conditions and revised company estimates, despite the ongoing concerns related to the wildfires and associated liabilities. The company’s financial performance and future prospects remain under scrutiny as the California legislature’s actions could significantly influence its financial position and stock valuation. Edison International continues to focus on grid modernization and wildfire mitigation, investing in infrastructure safety and resilience. The company has not yet determined whether its equipment was linked to the Eaton fire, and investigations are expected to continue for several months.

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