Edison Utility Accused of Igniting LA Fire in Lawsuits (2)

Edison International Inc.’s southern California utility faces lawsuits blaming the energy provider’s equipment for igniting one of the wildfires still raging in the second-largest US metropolis.

The first of several suits filed Monday was brought on behalf of a group of homeowners, renters, business owners and others with properties destroyed by the deadly Eaton Fire in the Pasadena area. The complaints allege that Southern California Edison power lines were the cause of the blaze that leveled the community of Altadena. The initial suits are expected to be followed by thousands more legal claims.

Edison International Chief Executive Officer Pedro Pizarro said during an interview on Bloomberg Television that the utility had not yet been served with the first suit. He said the utility did not detect any electrical issues on a transmission line near the start of the fire. The cause of the blaze remains under investigation.

Read More: Edison Says It Found No Issues on Lines Near Eaton Fire in LA

The suit claims Edison didn’t properly maintain its electrical infrastructure, presenting “an inherent risk and danger of fire to private property” and that the company’s vegetation management wasn’t compliant with local rules. It seeks damages for property losses caused by the raging fires in and around the Eaton Canyon area.

“Edison knew about the significant risk of wildfires caused by its aging and overloaded utility towers and power poles before the Eaton Fire began,” according to the complaint.

As of early Monday, the Eaton Fire was 33% contained but had consumed more than 14,000 acres, destroyed or damaged thousands of structures and killed at least 16 people.

Natural Disaster

Angelenos have been unnerved as fires have spread across the city and its surrounding communities over the last week, turning thousands of homes and businesses into charred rubble. The fires are the most devastating natural disaster to strike Los Angeles since the 1994 Northridge earthquake, which killed 57 people, and are likely to rank among the costliest natural disasters in modern US history.

Wells Fargo & Co. analysts estimated that the fires could result in losses of as much as $30 billion for the insurance industry, significantly exceeding last week’s highest prediction from JPMorgan Chase & Co. that the fires stood to cost insurers roughly $20 billion.

The first suit, filed by Los Angeles lawyer Richard Bridgford, cites interviews with homeowners near Eaton Canyon who said flames were breaking out below Edison power lines after a power interruption on Jan. 7. Those same witnesses were cited in at least one other complaint, which said they had been interviewed for local television broadcasts.

One of the residents said he walked outside that Tuesday night and approached a tower holding Edison’s power lines and found “a fire maybe knee high” had started at its base, according to the suit. A resident who hikes in Eaton Canyon said he’d recently noticed the area was “full of dry debris and dead brush,” according to the complaint, which is peppered with photos and maps of the area.

Edison Analysis

Edison said in a regulatory filing last week that attorneys for insurance companies had asked it to preserve evidence for the Eaton Fire, where it had an energized transmission line. Edison said its analysis showed no operational or electrical anomalies in the 12 hours leading up to the fire’s start time.

“We have not seen in our telemetry any indication of an electrical anomaly,” Pizarro told Bloomberg Television. “Typically, when you have a fire across infrastructure, you see voltage dropping. We have not seen that in our study.”

Southern California Edison had intentionally cut power to more than 100,000 homes and businesses as gusts strengthened to reduce the risk of its wires sparking fires.

Rosemead, California-based Edison’s shares fell about 12% Monday at the close of NY trading. The company’s bonds weakened relative to Treasuries, extending a week of losses, after the initial suits were filed.

Evercore ISI analyst Durgesh Chopra estimated last week that Edison has almost $4 billion in exposure to fire claims.

History of Wildfires

The state has a history of catastrophic wildfires tied to electric-utility equipment operating during wind storms. PG&E Corp. — the state’s largest utility — was forced to file for Chapter 11 bankruptcy protection in 2019 to deal with a tidal wave of suits tied to multiple fatal northern California fires blamed on its wires.

Under California law, a utility can be held liable for property damage when its equipment ignites a fire even if it didn’t act negligently. If Edison is found liable for the Eaton Fire, it could dip into the state’s $21 billion utility wildfire insurance fund, set up as part of a series of reforms designed to provide financial protections to the state’s large investor-owned power companies after PG&E’s bankruptcy.

Edison’s equipment was blamed for starting the 2017 Thomas and 2018 Woolsey wildfires in the LA area with estimated losses pegged at $9.9 billion.

Utilities in western states including Oregon, Colorado and Hawaii also have been pummeled with litigation over devastating fires. Last year, Hawaiian Electric Industries agreed to pay about half of a $4 billion settlement of home and business owners’ suits tied to the 2023 Maui wildfires. That settlement is still awaiting final approval.

The first case is Gursey v. Southern California Edison Company, 25STCV00731, California Superior Court, Los Angeles County, Central District (Los Angeles).

(Updates with multiple lawsuits in second paragraph, interview of Edison CEO starting in third paragraph.)

To contact the reporters on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net;
Mark Chediak in San Francisco at mchediak@bloomberg.net;
Malathi Nayak in San Francisco at mnayak21@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net;
Brian Eckhouse at beckhouse@bloomberg.net

Peter Blumberg, Steve Stroth

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