LOS ANGELES (Investing.com) -- Shares of Edison International (NYSE:EIX) tumbled 10% as the company faces scrutiny over its potential involvement in recent Southern California wildfires. The utility’s stock decline follows an update on the ongoing wildfires and power outages, with Edison International’s Southern California Edison (SCE) at the center of investigations into the origins of the fires.
Edison International reported that it has been asked to preserve evidence in connection with the Eaton (NYSE:ETN) Fire, which has caused significant property damage and garnered considerable media attention. Despite SCE’s preliminary analysis indicating no anomalies in equipment operation, the company has received preservation notices from insurance companies’ counsel, suggesting potential involvement in the fire. Additionally, SCE filed an Electric Safety Incident Report (ESIR) for the Hurst Fire after learning that fire agencies are investigating whether SCE equipment was involved in the ignition.
The wildfires have led to extensive damage and power outages, with over 500,000 customers restored to power, leaving approximately 62,662 without electricity. SCE employees and contractors, along with mutual assistance crews, are working tirelessly to restore service, although severe equipment damage and access restrictions in affected areas may prolong restoration times.
In response to the disaster, Edison International has pledged $1 million to support relief efforts and assist those affected by the wildfires, with initial contributions to various organizations including the American Red Cross and local nonprofits.
The company’s stock has seen a 26% drop over the last five days amidst the ongoing crisis. Bloomberg Intelligence analyst Nikki Hsu commented, "We would continue to watch for updates on the Eaton Fire (16 deaths and over 14,000 acres), for which Edison has been asked to preserve evidence, though its own analysis found no sign of involvement." Edison International has a self-insurance plan covering up to $1 billion, with its wildfire liability capped at $3.9 billion if its equipment is found to have triggered a fire without prudent management.
As the situation evolves, with dangerous weather conditions expected to persist, SCE prioritizes safety for customers, communities, and employees. The company’s efforts to protect communities through Public Safety Power Shutoffs (PSPS) have already shown to be valuable, with damage found on de-energized lines indicating the effectiveness of these measures in preventing further fire spread.
The broader implications of the wildfires are severe, with at least 24 fatalities reported and extensive property destruction. California Governor Gavin Newsom has described the firestorm as potentially the most devastating natural disaster in U.S. history, with estimated economic losses between $135 billion and $150 billion. Edison International’s role in these tragic events remains under close examination as investigations continue.
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