Eaton fire could wipe out California's $21-billion wildfire fund, documents show

Damage claims from the Eaton wildfire in Altadena could wipe out the $21-billion fund California created to shield utilities and their customers from the cost of wildfires sparked by electric lines, according to newly released state documents.

Investigators are seeking to determine whether Southern California Edison's equipment sparked the Jan. 7 inferno, which killed 19 people and destroyed 9,000 homes. If Edison is found responsible, “the resulting claims may be substantial enough to fully exhaust the Fund,” state officials who administer the wildfire fund wrote in a draft annual report to the Legislature.

The seven-member state Catastrophe Response Council, which oversees the fund, is scheduled to meet Thursday to discuss how potential damage claims from the Eaton fire could affect it.

Concerns are already emerging that, should Edison be found liable, it would have little incentive to keep damage claims from becoming excessive since the utility itself would be spared from covering most of the costs.

“Are we impressing on the utilities that they need to settle claims with diligence?” wrote one of the council members, according to meeting materials released ahead of Thursday's meeting. “Since the claims they settle are just passed on to us, they don’t have much incentive to keep claims low.”

Asked for comment on that statement, Edison spokeswoman Kathleen Dunleavy said that officials "need to be wise and cautious about how this money is spent."