As the California wildfires rage across Greater Los Angeles, millions of residents have been plunged into darkness to mitigate further risk of fire. Utilities have been blamed for exacerbating fires in the past by not cutting the power early enough, which has led southern Californian utility Edison to shut down part of its network. The question now is how will this infrastructure fare in the face of natural disaster, when will the power come back online, and did the state’s energy infrastructure contribute to the ignition or spread of the fire?
The January LA Fire
On Tuesday 7th January, a fire started in the Pacific Palisades neighborhood of LA, the cause of which is still unknown. It rapidly spread due to high winds and dry brush, running south and west into affluent neighborhoods. Firefighters continued to battle flames in nearby hillsides into Wednesday night without avail. The fire killed at least five people in the first 24 hours, as well as destroying hundreds of homes and leading to the evacuation of over 100,000 people.
As the blaze still rages, analysts are suggesting that the total damage from the devastating January fires could reach between $52 billion and $57 billion in economic losses. This includes both insured and uninsured losses of property, crops, and infrastructure. As well as other direct and indirect costs, such as evacuations, cleanup, emergency management, and medical expenses.
“This is already one of the worst wildfires in California history,” AccuWeather’s Chief Meteorologist Jonathan Porter said in a statement. “Should a large number of additional structures be burned in the coming days, it may become the worst wildfire in modern California history based on the number of structures burned and economic loss,” Porter added.
California’s Worsening Wildfires
Wildfires in California have appeared to worsen in recent years, with eight of the 10 largest wildfires in California history occurring in the last five years. By September last year, over 6,000 wildfires had burned through almost 1 million acres – very close to the average of about 950,000 acres, according to data from CAL FIRE. However, the speed at which the fires spread and the distance covered in 2024 was unprecedented.
Power Utility Response
Utility companies in many parts of the U.S. have been racing to improve their severe weather and natural disaster prevention and readiness for several years. In California, companies have established mitigation practices for wildfires, aware that it is a common occurrence in the state. This move also responds to previous failures by some companies that exacerbated wildfires, such as that seen in Maui in 2023.
The power utility Edison International is responsible for delivering much of the power in the region affected by the current wildfire but, so far, it seems that its mitigation tactics are helping to avoid further disaster. According to Edison, over 3 million Edison customers have experienced outages. This led the company’s stock to fall by 10.2% on Wednesday, decreasing by more than 13% at its lowest point in the day, driven by public fear and uncertainty.
Safety shutoffs are carried out to decrease the risk that airborne objects spark additional fires when they hit power lines, Jeff Monford, Edison’s spokesperson, said. It is uncertain when customers will regain power as the company must wait for the period of concern to pass so that crews can fix power lines and other affected infrastructure, according to Monford.
Addressing public concerns about Edison’s potential involvement in the fires, Ross Fowler from the Bank of America said in a note to clients: “At this time, there is no indication that SCE equipment is believed to have started the fire, as SCE has not filed an electric service incident report (ESIR). … There are multiple media reports indicating SCE equipment has been at least impacted by the fires and we would expect some incremental expenses related to the fire, regardless of ignition source.”
Wildfires across California have had significant financial impacts on utilities in the past due to the widespread destruction of energy infrastructure and the payments required from utilities if they are found to be liable for either the ignition of a fire or the spreading of a blaze. Northern California utility Pacific Gas and Electric Company was forced to file for bankruptcy in 2019, largely due to liability from wildfires, although it was able to exit bankruptcy in 2020.
As firefighters continue to tackle the blaze, officials will be assessing the fire to better understand the cause and assess the damage. Only time will tell whether Edison has been successful in putting its mitigation plan into action and helping prevent the further spread of the fire through its power shutdown efforts.
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