Scrutiny intensifies on Edison as DA investigation, pay cuts, earnings announced

More than a year after Southern California’s deadly twin wildfires, public utilities continue to fall into sharp focus, particularly the region’s electricity titan Southern California Edison.

The utility got more bad news this week, even as the company announced billions in profits over last year’s earnings, and an array of efforts to bolster safety and support in the recovery from the catastrophic Eaton fire.

Officials said the Los Angeles County District Attorney’s Office had launched a probe into whether the company bears criminal responsibility for the fire — which came mere days after state Attorney General Rob Bonta announced his department’s own civil rights investigation into the county’s evacuation alerts.

The utility has admitted that it’s possible its gear ignited the fire, and has already braced for a mammoth legal battle and potential court settlements in the wake of hundreds of lawsuits — and announced this week that its latest financial move in preparation was to reduce executive bonuses.

Some fear this will all eventually add up to crippling impacts for the utility, but others say it is too big to fail, regardless of the fires’ colossal hit, because of a state fund that would pay most of the damages.

D.A. probe

There was no large-type-headlined press release announcing a district attorney’s probe. Instead, in the utility’s 200-plus-page annual report to federal government regulators, released Wednesday, was the tersely written disclosure that the Rosemead-based Southern California Edison is being investigated for criminal liability over the cause of the Eaton fire.

“Edison International and SCE are also aware of an ongoing investigation by the Los Angeles (County) District Attorney’s Office of the Eaton Fire for the purpose of determining whether any criminal violations have occurred.”

It was a new twist this week in the more than one-year-long legal and political battle that by Wednesday included the utility touting its progress in the recovery, and announcing pay cuts among its executives, spurred by the costs of the fire.

But even as the utility shared this week an expanded survivors’ compensation program and its installation of thousands of miles of underground power lines, many victims, buoyed by the state’s recent announcement of a civil rights investigation, demanded that it can do substantially more to make Eaton fire survivors whole again.

Prosecutors on Thursday declined to comment on the criminal investigation. But in the company’s earnings call with shareholders and analysts on Wednesday, Edison International CEO Pedro Pizarro acknowledged the probe after a question from an analyst in the last seconds of the presentation.

Such investigations “are often to be expected when you have events of this scale of the Eaton fire,” he said. “Our team will be collaborating with the DA’s office, as they ask for any steps.”

Billions of dollars are at stake for the company, which has publicly acknowledged that, in lieu of any reasonable evidence to the contrary, a de-energized idle transmission line was likely a culprit in the catastrophic Jan. 7, 2025, blaze, which killed 19 people and destroyed more than 9,000 structures in Altadena, Pasadena and Sierra Madre.

Edison acknowledged as much in the Form 10-K document, noting that the company “could be subject to material fines, penalties, or restitution if its determined that it failed to comply with applicable laws and regulations.”

But even with the acknowledgement of its potential liability last year, the company has sued L.A. County and Pasadena Water & Power and multiple other local agencies in an effort to spread the burden of responsibility across several entities.

And in the face of the L.A. County criminal investigation, Pizarro echoed what has long been the company’s defense: “As we look at the events here, we continue to be confident that SCE will be able to make a good-faith showing that its actions were those of a reasonable utility operator,” he said. “That gives us a lot of comfort as we look at whether (the D.A.’s) investigation, or just broader investigations into the event, and looking ahead for the CPUC to affirm SCE’s prudency in the future.”

On CNBC on Thursday, Pizarro said “we don’t see any basis for any criminal action,” noting that the Eaton fire was the culmination of “unique circumstances” — an idle line that he said was grounded at both ends.

He said lessons have been learned, including the need to further “harden” such infrastructure in an era when more residential structures are in high-fire-risk areas.

The DA’s action brought a range of responses Thursday in a region where many survivors continue to struggle in the fire recovery.

Joy Chen, executive director of the Eaton Fire Survivors Network, said of the DA’s criminal investigation: “I guess we’ll see where it leads. I know a lot of people are going homeless now as a result of their negligence.”

Adriana Bautista, a local organizer and fire survivor with Dena Rise Up Coalition, mused that “If Edison International is being criminally prosecuted for the Eaton fire, can we really trust them to compensate (survivors) fairly?” 

The compensation plan offered claimants who suffered loss in the fire a chance at an early settlement in exchange for waiving their ability to sue.

On Wednesday, Edison officials said the plan so far has seen:

• 2,405 claims submitted, consisting of nearly 7,000 individuals;
• 593 offers extended to more than 1,700 individuals, totaling more than $183 million; and
• 86 claims payments already made or in process to individuals, totaling $18 million.

The company also announced changes to the compensation plan, including:

• Increased legal fee compensation to 20% for claimants represented by attorneys when they file a claim; and
• Expanded compensation for tenants to cover up to three months of housing assistance at the higher of actual pre-fire rental rates or monthly fair rental value.

But the changes got a muted reception among some supporters.

Chen said Thursday that Edison’s increase in rental assistance for a three-month period was not nearly enough.

“People have been out for a year,” Chen said. “Three months is inconsequential because it’s going to take years until we get back home.”

Survivor advocates continued to lament the program as unfair, and, as Bautista noted, “undervalues and understates what living expenses actually cost in the L.A. area, the values of properties that were damaged.”

Bautista emphasized there’s no shame in survivors opting for Edison’s compensation, but she said what this week’s changes showed was that SCE does have the ability to choose to amend the program — that the company has the capacity to make changes that could potentially be more fair, she said.

“That’s where the issue is,” she said.

The utility also announced its latest financial move, to cut executive bonuses.

Pizarro told the New York Times that six executives at the utility will lose an estimated $2 million as a result of the fire, only the second time in the utility’s compensation committee has reduced executive pay because of a fire — the first being the Woolsey fire in 2018.

Pizarro told the Times he supported the position, in which about half of the bonus reductions will come from his pay. Edison made a $2 million donation from shareholders to the Pasadena Community Foundation for support of the recovery.

Chen was underwhelmed that Pizarro and five other Edison executives were getting their bonuses reduced.

Chen noted that Pizarro made a total of $21 million in total compensation in 2024.

“If you’re left with $20 million after devastating all these lives, cool, that’s nice money if you can get it,” she said.

The company’s compensation committee this year decided to “meaningfully reduce” the bonuses, mindful that “these reductions serve to acknowledge the community’s loss,” said Kathleen Dunleavy, director of Edison’s External and Employee Communications.

What they weren’t, she added, were a reflection of the executives’ performance, adding that we are “still reaffirming confidence in SCE’s ability to demonstrate prudent operations.”

Indeed, after all was said and done, the company earned $4.5 billion last year, an increase in profit of $1.3 billion the year before.

Pizarro noted the company’s “disciplined execution” and cost management while touting its commitment to customers and its investors.

Bautista, whose northeast Pasadena home was damaged by the fire’s smoke, said the company must do more to show that it’s not all about shareholders.

“Look at the big picture. They still made money,” she said.

Of the pay cuts, she added: “It’s an empty, symbolic gesture.”