California lawmakers are running out of time to protect utility customers from another financial blow tied to the state's worsening wildfire crisis, as major utilities could face credit downgrades if no solution is in place before the legislative session ends Aug. 31.
According to Utility Dive, if lawmakers do not act, California's investor-owned utilities could be hit with credit downgrades, potentially followed by higher customer costs.
What's happening?
On Edison International's second-quarter earnings call, Edison International President and CEO Pedro Pizarro told analysts that Southern California Edison's credit standing could weaken unless lawmakers pass a response to mounting wildfire liability.
"That could be a significant cost impact to the cost of debt that gets passed through to SCE customers if we don't have a framework in the next four weeks that is credit-supportive for our utility," he said.
Company filings indicate that SCE is already carrying large wildfire costs, including from the 2025 Eaton Fire, and has committed roughly $1.6 billion to victims through insurer settlements and its Wildfire Recovery Compensation Program.
So far, more than 5,400 claimants have received $750 million through that program, while the utility said it has received claims from more than 12,000 people, trusts, and entities.
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The company has also said its equipment was likely involved in the ignition of the Eaton Fire, though investigations are still underway. As of July 23, it had been named in more than 2,000 lawsuits involving 32,000 plaintiffs.
Why does it matter?
When a utility's credit rating falls, borrowing for grid upgrades becomes more expensive. Those added costs can then be passed on to customers.
Wildfire liabilities can also divert money and attention from grid upgrades and other energy investments.
SEC filings show SCE has already paid more than $10.5 billion in settlements tied to several earlier wildfires. Separately, Utility Dive reported that regulators allowed the utility in April to recover an additional $274 million to $650 million from customers this year for Eaton Fire costs.
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What's being done?
Pizarro said the company still had not seen draft legislation before the session ends that would establish a wildfire-cost framework strong enough to reassure credit agencies.
Company filings show that SCE has also applied to access the California Wildfire Fund, which could provide up to $21 billion for Eaton Fire claims. Any costs above that amount would be financed through securitization under state law, spreading repayment over time instead of imposing the full burden at once.
The utility said it is continuing compensation for victims while trying to stay on track with its clean energy goals. Pizarro said SCE is supplying 60% carbon-free electricity and bought 900 megawatts of energy storage in 2025.
"If you look at just the S&P ratings, it's BBB- for [SCE]. So there's nowhere to go in investment grade, right? The next step is non-investment grade," Pizarro said.
He added that Edison's current posture was a "laser focus on Edison International."
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