SoCal Edison customers to cover $1.6 billion in Thomas Fire settlement costs, state officials say

Southern California Edison ratepayers will cover $1.6 billion in settlement costs to pay victims of the 2017 Thomas Fire, more than half of the $2.4 billion being paid out for the massive wildfire and deadly mudslides that followed weeks later.

With a 4-0 vote, the California Public Utilities Commission unanimously approved SoCal Edison's request to have customers cover the expenses related to the devastating blaze, which authorities determined was caused by the company's power lines. At the time, the Thomas Fire was the largest recorded in California state history, burning more than 280,000 acres — an area spanning over 430 miles — across Ventura and Santa Barbara counties in the winter of 2017. Officials say it led to mudslides in Montecito weeks later which killed 23 people in the town of just 8,600.

In August, SoCal Edison announced it had reached an agreement with the California Public Advocates Office to have costs for claims related to the fire and mudslides recovered from ratepayers. A statement from the utility giant said approval of the settlement would allow it to "continue doing necessary work to mitigate the effects of climate change."

The company also said the $1.6 billion being recovered from customers is just 60% of its initial request. Meanwhile, Edison International shareholders will cover about $1 billion and fund $50 million for "system enhancements" to reduce the risk of wildfires and "make SCE's system safer for customers and communities," the SoCal Edison statement said.

During a meeting Thursday, when the state commission voted to approve the utility's request, California Public Utilities Commission President Alice Busching Reynolds said the Thomas Fire happened before a state bill created an insurance fund covering wildfire-related costs.

Assembly Bill 1054 provides that fund for California fires that occurred after Jan. 1, 2019. The Thomas Fire started on Dec. 4, 2017 and continued burning for about a month.

"Because this is a pre-AB 1054 wildfire, for this wildfire, there are no funds set aside to pay claims beyond insurance proceeds," Reynolds said, later explaining the commission's approval further.

"It's an agreement to settle contested claims that would've been extensively litigated with an unknown result if the settlement is not adopted," she said, noting that the agreement also includes a provision to credit customers "for any amounts that are recovered in connection with certain cross-claims."

She said the $1.7 billion being covered by SoCal Edison customers is $1 billion less than the utility had initially requested they pay.

The Thomas Fire burned down more than 1,000 structures, including homes, before the deadly Montecito mudslides weeks later in January 2018 destroyed more than 100 homes. The California Governor's Office of Emergency Services reports the massive blaze continued burning as a "quick-moving but powerful winter storm increased the risk of mudflows" in the Montecito area.

Fears of destructive mudslides were realized "when mud and debris loosened from burn-scarred areas in the Santa Ynez mountains and plowed through Montecito," the governor's office says, leading to evacuations as they devastated the area and left 23 people dead. 

Geologists and wildfire experts say the risks of mudslides rises when wildfires leave terrain scorched barren, particularly when followed by heavy rain that can destabilize the ground and can send mud and debris flowing. Last weekend, flooding along the Pacific Coast Highway led to warnings from forecasters of debris flows in areas left burn-scarred by the Palisades Fire. Forecasters warned such debris flows could prove "life-threatening" and some mudflows later led to road closures around the coastal area of Los Angeles County including Pacific Palisades.

SoCal Edison has maintained it acted "prudently" in its operations before the Thomas Fire, saying it was managing those operations "at or above what is required by regulators" — while also blaming the deadly debris flows in Montecito on "inadequate governmental flood control infrastructure and deficient evacuation communications."

"The people who lost their lives, family members, homes and businesses will always be in our hearts," Edison International CEO and President Pedro J. Pizarro said in a statement released Aug. 29. "Climate change is driving catastrophic wildfires, and SCE will continue its work to mitigate the effects of climate change and harden the electric system."