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Edison International's quarterly profits fall as L.A. wildfire investigation continues

Edison International announced a decline in its second-quarter profits on Thursday as it struggled to deal with increased operating costs and investigations related to wildfires that occurred earlier this year in Los Angeles.

The Los Angeles area was devastated by multiple wildfires that scorched thousands of acres in January. It is estimated to be the costliest natural disaster in U.S. History. Electric utilities in the region have also come under increased scrutiny.

Wildfires that originate on power lines can also cause power outages.

Southern California Edison, a subsidiary of Edison International, faces multiple lawsuits alleging that its electrical equipment caused the Eaton Fire, one of the most significant wildfires to occur in the Los Angeles region.

While investigations are underway into the cause of Eaton Fire, lawsuits point to SCE transmission equipment in the hills above Altadena for starting the fire.

Edison CEO Pedro Pizarro stated on a earnings call that "SCE does not have any evidence pointing towards another possible ignition source." "In the absence of additional evidence, it is possible that SCE equipment was involved in the ignition," Edison CEO Pedro Pizarro said on a company earnings call.

The company attributes the decline in earnings primarily to the higher operating and maintenance costs and the net effect of regulatory decisions made by Southern California Edison (SCE). The decrease was also attributed to higher interest costs at the parent company.

SCE has said that it will invest $6,2 billion to stop wildfires from being caused or affected by its system.

The company plans to also launch a compensation program for wildfires.

California has a wildfire insurance fund to protect utilities such as SCE against wildfire liabilities. Bloomberg News reported on Wednesday that California Governor Gavin Newsom proposed legislation to boost the state's wildfire fund with an extra $18 billion.

The report stated that electricity ratepayers will contribute half of the money via a monthly charge, while the remaining half will be funded by utility firms who benefit from the fund. This includes Edison International.

The company confirmed its forecast of adjusted earnings between $5.94 and $6.34 for 2025. Analysts expect $6.06 per share.

The Rosemead-based California company reported a second-quarter net profit of $343m, or 89c per share. This compares to $385m, or $1.14 a share, one year ago. Reporting by Khusbu Jennifer in Bengaluru, and Laila Kerney in New York. Editing by Leroy Leo.

(source: Reuters)