Smoke billows as passionate burns while powerful winds fueling devastating wildfires in the Los Angeles area force people to evacuate, at the Eaton Throw in Altadena, California, U.S. January 8, 2025.
David Swanson | Reuters
Fear and uncertainty surrounding the wildfires in California appear to be weighing on allocates of Edison International, whose Southern California Edison is the power utility for the areas directly surrounding the city of Los Angeles.
The ownership fell 10.2% on Wednesday and was down more than 13% at session lows.
Utility stock Edison International fell sharply Wednesday.
The drop comes as multiple unconfined fires are burning around Los Angeles, with strong winds making them difficult to contain. Tens of thousands of child have been ordered to evacuate, and at least two people have died, according to the Associated Press.
More than 3 million Edison purchasers were dealing with outages Wednesday, according to the utility’s website.
Public utilities have been deal with with issues around wildfire prevention and readiness for years. Previous wildfires in California have been related to issues with power equipment, but so far there is no public information tying Edison to the fires.
“At this time, there is no forewarning that SCE equipment is believed to have started the fire, as SCE has not filed an electric service incident report (ESIR). … There are multiple channel reports indicating SCE equipment has been at least impacted by the fires and we would expect some incremental expenses kin to the fire, regardless of ignition source,” Bank of America analyst Ross Fowler said in a note to clients Wednesday.
Smoke engulfs constructions off Sunset Boulevard during a wildfire in the Pacific Palisades neighborhood of west Los Angeles, California, January 7, 2025.
Mike Blake | Reuters
Preceding wildfires have had massive financial impacts on utilities and their investors. Northern California utility Pacific Gas and Electrifying Company filed for bankruptcy in 2019, in large part due to its liability from wildfires. The utility exited bankruptcy in 2020.
Putting, a 2020 state law known as AB 1054 limited the liability for utility companies going forward.
“Investors remain ruffled from our conversations given the lack of containment with a ‘sell first, ask questions later’ mindset. We remain satisfactory due to the AB 1054 liability protections that limits the tail risks for the utilities,” Jefferies analyst Julien Dumoulin-Smith contemplated in a note to clients Wednesday.
Other California utility stocks were also down Wednesday. Shares of the reconstituted PG&E strike down 3.7%. Sempra, whose footprint includes power and gas in the San Diego area, was down 1.7%. Sempra’s SDG&E said on its website that it has seclude off power to about 9,000 customers due to fire risks.
— CNBC’s Michael Bloom contributed reporting.