Smoke billows as the fire burns while strong winds fueling a destructive wildfire in the Los Angeles area forces people to evacuate the Eaton Fire in Altadena, California, United States, January 8, 2025.
David Swanson | Reuters
Fear and uncertainty surrounding California wildfires appear to be weighing on stock prices. Edison InternationalSouthern California Edison is the electric utility for the area surrounding the city of Los Angeles.
Shares were down 13% in afternoon trading Wednesday.
Utility stock Edison International fell sharply on Wednesday.
The decline comes as several large fires are burning around Los Angeles and strong winds are expected to make them difficult to contain. According to the Associated Press, tens of thousands of people have been ordered to evacuate and at least two people have died.
As of Wednesday morning, about 70,000 Edison customers were without power, according to the utility’s website.
Utilities have been struggling to address issues related to wildfire prevention and preparedness for years. Previous California wildfires have been linked to power equipment problems, but so far there has been no public information linking Edison to the fires.
“At this time, there is no indication that SCE equipment caused the fire because SCE has not filed an Electrical Service Incident Report (ESIR). … There are multiple media reports that SCE equipment was at least affected by the fire,” Bank of America analyst Ross Fowler said. “Regardless of the cause of the fire, we expect costs associated with fires to increase,” it said in a note to customers Wednesday.
Smoke engulfs buildings on Sunset Boulevard during a wildfire in the Pacific Palisades area, west of Los Angeles, California, on January 7, 2025.
Mike Blake | Reuters
Previous wildfires have had a devastating financial impact on utility companies and investors. Northern California utility Pacific Gas and Electric Company filed for bankruptcy in 2019 due to liabilities from wildfires. The utility exited bankruptcy in 2020.
But a 2020 state law known as AB 1054 limited utility companies’ liability going forward.
“Investors remain nervous about our talks because of the lack of deterrence in the ‘sell first, ask questions later’ mentality,” said Julien Dumoulin-Smith, an analyst at Jefferies. “I remain comfortable,” he said. He said this in a note to customers on Wednesday:
Other California utility stocks also fell Wednesday. restructured stock PG&E It fell 4%. alwayswhich includes power and gas in the San Diego area, fell 3%. SDG&E of Sempra said on its website that it had shut off power to about 7,000 customers due to the fire risk.
— CNBC’s Michael Bloom contributed reporting.
