Edison stock turns volatile as growing blame for wildfires lands on the power company
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Southern California’s catastrophic fires have rocked the stock of Edison International, the parent company of Southern California Edison, as accusations and lawsuits about the utility’s potential role in starting the fires mount.
Shares of Edison International closed up 5% at $61.30 on Wednesday after plunging 23% this month, making it one of the worst performers on the Standard & Poor’s 500. The rebound came after Ladenburg Thalmann analysts upgraded their rating of the stock to neutral from sell, saying that their target price of $56.50 a share reflected worst-case outcomes associated with the current wildfires.
Multiple fires are raging throughout California, forcing evacuations and leaving a destructive path. The Camp fire in Northern California’s Butte County has killed at least 86, and three are still missing. It’s the deadliest fire in state history. The Woolsey fire obliterated more than 1,600 homes and businesses in Los Angeles and Ventura counties. At least three died in the blaze.These are the victims of the California wildfiresSearch before-and-after images of the Woolsey fire burn area by addressHow to talk to kids about the fires
“At this time, it is too early to discern what the outcomes will be with respect to the impact of the fires on the California Wildfire Insurance Fund solvency and/or the future earnings of Edison International,” the analysts wrote, according to Barron’s. “An initial assessment of SCE’s role in the start of the fires will likely not occur until the summer of 2025 at the earliest.”
State lawmakers established the wildfire fund in the wake of wildfires several years ago after Wall Street investors lost confidence and ratings agencies threatened to downgrade California’s investor-owned utilities.
Market analyst Zacks downgraded Edison International stock from outperform to neutral after the fires started last week. Zacks predicted Edison’s operating revenue would increase during 2025 and 2026, while acknowledging that “the company has been incurring significant wildfire-related costs” and that “higher-than-expected decommissioning costs could materially impact the company’s operating results.”
RBC Capital Markets, another analyst, had a loftier view of Edison as recently as October when it called the utility “a high quality operator, with investor confidence around wildfire risk improving from best in class mitigation efforts.”
Coverage of the firefighters’ battle against Eaton and Palisades fires, including stories about the dangerous weather and victim frustration.
The fallout from the fires is an abrupt disruption for a company that had been surging in recent months. In its most recent quarterly report, the company posted a profit of $516 million, or $1.33 per share, compared with $155 million, or 40 cent per share, in the third quarter of last year.
“Our team has achieved remarkable success over the last several years managing unprecedented climate challenges, making our operations more resilient and positioning us strongly for the growth ahead,” President Pedro J. Pizarro said in the report.
Fire agencies are investigating whether downed Southern California Edison utility equipment played a role in igniting the 800-acre Hurst fire near Sylmar, company officials have acknowledged.
The company issued a report Friday saying that a downed conductor was discovered at a tower in the vicinity of the Hurst fire, but that it “does not know whether the damage observed occurred before or after the start of the fire.” The fire is nearly fully contained, according to the California Department of Forestry and Fire Protection.
SCE is also under scrutiny for possibly being involved in sparking the Eaton fire that has burned 14,000 acres and destroyed thousands of structures, wiping out whole swaths of Altadena, where at least 16 people died in the blaze.
State regulators criticized Southern California Edison for falling behind in inspecting transmission lines in areas at high risk of wildfires just months before the deadly Eaton fire, according to state documents.
On Tuesday the Newport Beach law firm of Bridgford, Gleason & Artinian filed a mass action complaint in Los Angeles Superior Court against SCE regarding the Eaton fire on behalf of victims including Jeremy Gursey, whose Altadena property was destroyed in the fire.
“Based upon our investigation, our discussions with various consultants, the public statements of SCE, and the video evidence of the fire’s origin, we believe that the Eaton Fire was ignited because of SCE’s failure to de-energize its overhead wires which traverse Eaton Canyon—despite a red flag PDS wind warning issued by the national weather service the day before the ignition of the fire,” lawyer Richard Bridgford said in a statement.
The firm said it has represented more than 10,000 California fire victims in past suits against Pacific Gas & Electric Co. and SCE. Bridgford told Yahoo Finance that his inbox is full of Southern California residents seeking to participate in the Eaton fire lawsuit and that he anticipates “there’ll be hundreds joining.”
The most extreme level of a red flag fire warning, a “particularly dangerous situation,” returned to parts of Los Angeles and Ventura counties Wednesday morning, heightening concerns about the potential for new fires.
“The danger has not yet passed,” Los Angeles Fire Department Chief Kristin Crowley said during a news conference Wednesday. “So please prioritize your safety.”
State Farm, California’s largest home insurer, said Wednesday that it will offer renewals to all L.A. County residential policyholders affected by the fires.
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