Southern California Edison began accepting claims Wednesday, Oct. 29, for its Eaton fire compensation program after expanding the number of victims eligible to receive payment and increasing the amounts given to children.
The changes were made after SCE heard from more than 1,000 people on a draft protocol released in September for the compensation program, which is designed as an alternative to litigation. More than 100 lawsuits blame SCE’s equipment for igniting the monstrous blaze in January that destroyed or damaged more than 9,000 structures and killed 19 people.
Pedro Pizarro, president and CEO of Edison International, the parent company of SCE, said in an interview with Southern California News Group that the compensation program is not an admission of guilt, but an effort to get victims back on their feet faster, while saving money for the state fund that likely will have to cover most of the financial damages.
Pizarro in the past has acknowledged there is evidence a long-dormant SCE line reenergized and triggered the fire. A state investigation is ongoing.
“Overall, what we’re going for here is to have a process that can provide a faster solution, provide certainty and help this community move on and rebuild and recover,” Pizarro said. “We’ve already determined there’s a probable loss here, so rather than go through the normal litigation cycle that takes years and years, we would rather move forward, help people get compensation much earlier. And that also reduces the cost for everyone.”
Eligibility area expanded
The new protocol expands the eligibility area to include 5,579 more properties damaged by smoke and ash, bringing the total number of all properties eligible for compensation to 18,267.
After conducting multiple workshops on the draft pay protocol, SCE also raised the compensation per child for noneconomic damages in destroyed structures by 50%, to $75,000. Children in homes that sustained major damage would now be eligible for $25,000, up from $15,000.
Remaining the same would be rates that would pay owner/occupants of a destroyed 1,500-square-foot house $900,000 in rebuilding compensation, plus $200,000 for working with the program. Another $115,000 per adult would be paid for noneconomic damages, up from $100,000 in the draft protocol.
Under the revised plan, death benefits would stay the same at $1.5 million for pain and suffering, plus $500,000 for each surviving spouse and eligible dependent. Another $5 million would be paid as a premium for going directly through the Edison fund.
Also increased was the fair rental valuation. For a home with a prefire value of $1.2 million, the annual fair rental value was pushed to $40,000 from $34,286.
All payments could be reduced by whatever victims receive through their insurance coverage. And the program would not be open to hedge funds buying up properties, Pizarro said.
In all, SCE made 50 adjustments to the program, including streamlining some of the needed documentation.
Program based on models
The pay schedule is based on models designed by Compass Lexecon, a global economic consulting firm. The RAND Corp. assessed the models at SCE’s request and determined that the formulas used by Compass Lexecon were “thoughtfully done and well executed.”
However, Rand noted that the models tended to overestimate values where the prefire property value was low, and underestimate values where the prefire property value was high.
Pizarro said the model system was needed because of the sheer volume of expected claims.
The protocol and models are primarily for SCE’s “fast pay” track, in which claims will be processed and an offer made in 90 days. If accepted, the money will be paid in 30 days, Pizarro said. A more detailed process that looks in-depth at each property is available, but could take up to nine months to result in an offer.
Pizarro said victims could still go through the claim process and remain in the litigation. Only if they accept SCE’s offer would they have to forfeit their right to sue.
Multiple sessions have been scheduled for victims to learn more about the program. Registration is available at sce.com/directclaims for the first two scheduled sessions:
- Saturday, Nov. 1, 10-11:30 a.m., John Muir High School, 1905 Lincoln Ave., Pasadena.
- Wednesday, Nov. 5, 7-8:30 p.m. (virtual)
Claims will be accepted by SCE until Nov. 30, 2026 — nearly two months before trial is scheduled in the litigation.
Aging victims targeted?
Some plaintiffs’ attorneys have argued that SCE’s program is an attempt to pay aging and desperate Eaton victims less than they could get through the litigation in exchange for the promise of fast cash. They also accuse SCE of stalling on settlement talks in the litigation in order to push their own program.
“We’re not stalling,” Pizarro responded. “We’re going through the legal process and … I won’t comment on the details of the legal process. … We will certainly be putting a lot of emphasis on this wildfire recovery compensation program because we think it’s a strong avenue, but at the same time we will certainly abide by the court’s direction around specific litigation cases.”
Pizarro went on to say he was offended by the allegation from some plaintiffs’ attorneys that SCE was preying on desperate victims to save money.
“Our goal here is to help my community, our community, recover faster and do it at lower expense and with lower pain and less time. That’s the goal,” he said. “We’ve already said we know we face exposure here through litigation; we will work through that, as we have with other unfortunate fire events.
“We’re trying to put money in the pockets a lot faster so they can rebuild their lives and we’ve worked really hard to make sure those offers are fair not just in our view but in the view of outside experts.”
Pizarro noted that claimants are welcome to have attorneys help them work through the SCE program, which provides an extra 10% for attorney costs. However, he challenged lawyers in the “fast pay” track to lower their traditional fees of 25-30%.
“What’s fair is fair,” he said.
State Wildfire Fund
If found liable for Eaton fire damages, Edison’s customer-funded self-insurance would be responsible for the first $1 billion. The utility could then tap the $22 billion state Wildfire Fund for the rest. The fund was established in 2019 to keep Edison and two other investor-owned utilities from going bankrupt from causing wildfires.
However, state officials are concerned that the Eaton fire could deplete the entire fund and are considering ways to replenish it.
Pizarro said SCE’s compensation program could help minimize the exposure to the wildfire fund, meaning there would be more left “for heaven forbid a future fire from any of the three investor-owned utilities.”
Ultimately, Pizarro said he sees a rebuilt Altadena that is “hardened” to the kind of mega-fire that consumed it — a fire that he acknowledged his company’s own equipment, coupled with fierce winds, could have played a role in.
As part of that “hardening,” SCE is undergrounding dozens of miles of lines in Altadena. However, victims note they will be charged $10,000 to hook up to those lines. Pizarro said the connection charges are required by a California Public Utilities Commission tariff. He said Edison is working on ways to handle the fees, perhaps, through third-party charitable contributions.
“Rebuilding (Altadena) stronger is the vision. We miss it. I miss it. And I want to see it back.”
This is a developing story. Please check back for updates.