California Utilities Respond to Wall Street Journal Article “Wildfires Are Making Investors Nervous About Los Angeles Area Utility Again”

In the wake of the tragic fires in Los Angeles, the Wall Street Journal published an editorial title suggesting the solvency of California utilities is a "toss of the dice to an uncomfortably large degree" given wildfire risks. Unfortunately, the article ignores the important contributions the passage of California Assembly Bill 1054 has made to providing financial protections for wildfire liabilities and associated costs linked to investor-owned utility equipment.

Southern California Edison and Pacific Gas & Electric sought to draw attention to this major oversight in the article through the following letter to the newspaper's editors. PG&E and Edison International share confidence in the state Wildfire Fund, established by AB1054. The fund is working as intended: to protect wildfire victims, customers, and utility investors, to help ensure utilities can continue making critical investments in the grid and enable the state's clean energy transition. We believe policymakers will take any necessary action to make any improvements to the fund, if needed.

Jan. 13, 2025

To the Editor:

Re: Wildfires Are Making Investors Nervous About Los Angeles Area Utility Again, Jonathan Weil (Jan. 9, 2025)

The wildfires across Los Angeles are devastating, and all focus is on protecting lives and supporting the safety of these communities.

Speculating on the cause of these fires as they still rage and relying on dated quotes from six years ago was a missed opportunity to educate readers about today's realities. At that time, Pedro J. Pizarro discussed the possibility that one or more big fires could eventually lead to bankruptcy for Edison International.

That is no longer the case.

In July 2019, after Pizarro's quotes, California Assembly Bill 1054 was passed, which provides a strong regulatory construct and financial protections for wildfire liabilities and associated costs linked to investor-owned utility equipment. Notably, it created additional safety oversight, codified prudency standards into law, and capped utility liability exposure. It also created the $21 billion Wildfire Fund to reimburse IOUs for claims payments.

Importantly, since then, our respective electric power companies have operated under industry-leading wildfire mitigation plans approved by California's Office of Energy Infrastructure Safety and ratified by the California Public Utility Commission. These have significantly bolstered efforts to protect against wildfire threats and to respond when they happen. Efforts have included replacing bare overhead lines with covered conductor or undergrounding, implementing fast-acting protection technology, enhancing monitoring and inspection, and conducting Public Safety Power Shutoffs.

In addition, California has doubled its investment in fire suppression resources. Since fire risk can never be zero, if a catastrophic event occurs despite these efforts, the provisions of AB1054 will enable utilities to manage liabilities while maintaining financial health to power our state's economy. The AB1054 construct protects investors who have risked their capital to build the infrastructure that Californians need.

Finally, and most importantly, our hearts are with those who have been impacted by these fires.

Pedro J. Pizarro

President and CEO, Edison International

Patti Poppe

CEO, Pacific Gas & Electric Corporation

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