Summary
Edison International (EIX) announced a significant settlement agreement on September 22, 2020, related to the 2017 Thomas Fire, Koenigstein Fire, and the subsequent 2018 Montecito Mudslides. Southern California Edison (SCE), a subsidiary of EIX, agreed to pay $1.16 billion to insurance subrogation plaintiffs, plus future payments tied to claims paid until July 2023. This settlement resolves claims from these specific events but does not encompass all litigation stemming from the 2017/2018 Wildfire/Mudslide Events, as SCE is still in settlement discussions with hundreds of individual plaintiffs for other related claims. This development has led to a substantial increase in EIX's accrued estimated losses for the 2017/2018 Wildfire/Mudslide Events. The total accrued estimated losses have been revised upwards to $4.643 billion as of September 22, 2020, reflecting an increase of $11.296 billion from the previously estimated lower-end range. While EIX expects to recover a portion of these costs through electric rates ($76 million for the FERC portion) and insurance, the net charge to earnings is estimated to be approximately $878 million after tax. Investors should note that potential fines or penalties have not been included in these estimates, and actual losses could differ based on ongoing litigation uncertainties.
Key Highlights
- 1Edison International (EIX) and its subsidiary SCE reached a $1.16 billion settlement with insurance subrogation plaintiffs for the Thomas Fire, Koenigstein Fire, and Montecito Mudslides.
- 2The settlement includes an additional component for future payments based on claims paid by insurers until July 15, 2023, up to a specified cap.
- 3This settlement resolves specific litigation but does not cover all claims related to the 2017/2018 Wildfire/Mudslide Events, as other settlements are still being pursued.
- 4EIX has significantly increased its accrued estimated losses for the 2017/2018 Wildfire/Mudslide Events to $4.643 billion as of September 22, 2020.
- 5The net charge to earnings for EIX is expected to be approximately $878 million after tax due to the increased loss accrual.
- 6EIX anticipates recovering a portion of these costs through insurance (remaining approximately $843 million for Thomas/Koenigstein/Montecito and $794 million for Woolsey as of June 30, 2020) and through electric rates for the FERC-jurisdictional portion ($76 million).
- 7The company has not included potential fines or penalties in its current loss estimates, highlighting ongoing uncertainty.