Southern California Edison customers are facing another source of uncertainty around future electricity costs after California lawmakers ended the 2026 legislative session without completing a broader overhaul of the state's wildfire liability framework.
The immediate result is not a new wildfire-related SCE rate increase.
Instead, the concern centers on the financial risk faced by investor-owned utilities and what higher borrowing costs could eventually mean for the cost of financing poles, wires, substations, wildfire mitigation and other grid investments.
Edison International CEO Pedro Pizarro has argued that the unresolved wildfire framework is already increasing financing costs and warned that further deterioration in the company's credit position could ultimately raise costs borne by customers.
Whether those costs ultimately appear in future SCE rates would depend on utility financing, regulatory proceedings and decisions by the California Public Utilities Commission.
The distinction matters: Edison is warning about potential future cost pressure. SCE customers have not been assigned a specific new rate increase because wildfire liability legislation stalled.
What Happened With California's Wildfire Liability Legislation?
California policymakers spent much of 2026 discussing changes to the state's system for paying claims after catastrophic wildfires involving investor-owned utility equipment.
One late-session proposal, Senate Bill 492, included provisions involving faster payments to survivors, wildfire planning, claims practices and utility accountability.
The measure reached the Assembly but was not brought to a final vote before the legislative session ended.
A broader liability framework sought by Governor Gavin Newsom and investor-owned utilities also did not become law.
The debate involved several competing concerns.
Utilities argued that greater certainty around catastrophic wildfire exposure could help preserve access to capital and reduce financing risk.
Fire survivors, consumer advocates, insurers and local governments raised concerns about proposals that could shift costs away from utilities, affect insurance prices or change how wildfire victims and public agencies recover damages.
Governor Newsom said after negotiations that the system still needed broader structural changes addressing the long-term durability of the Wildfire Fund, electricity affordability and compensation for fire survivors.
How California's Wildfire Fund Works
California created its utility Wildfire Fund in 2019 after catastrophic utility-related fires raised concerns about the financial stability of the state's major investor-owned utilities.
The fund can help participating utilities pay eligible wildfire claims when statutory requirements are met.
Southern California Edison, PG&E and SDG&E participate in the fund.
Under the existing framework, shareholder exposure for certain unrecoverable wildfire costs can be limited to a percentage of the utility's transmission and distribution equity rate base when statutory conditions apply.
Edison has said its current exposure under that formula is roughly $4 billion.
The company is seeking a more durable liability structure because the existing statutory protection can lapse if the Wildfire Fund is depleted.
Why Credit Ratings Matter to an Electric Utility
Electric utilities require large amounts of capital.
They finance transmission systems, distribution equipment, substations, grid hardening, wildfire prevention work and other infrastructure through a combination of debt and shareholder capital.
The CPUC's cost-of-capital process specifically considers debt and equity financing because utilities need continued access to capital at reasonable costs.
When lenders and investors view a company as riskier, the interest rate required to lend money can rise.
That is why a utility credit downgrade can matter beyond Wall Street.
Fitch Changed the Outlook for Edison and SCE
Following the collapse of the broader wildfire reform effort, reporting indicated that Fitch changed the credit outlook for Edison International and Southern California Edison from stable to negative.
A negative outlook does not automatically mean the company's debt has been downgraded to below-investment-grade status.
It signals a greater possibility of future rating pressure if financial conditions weaken.
Pizarro has said wildfire-related market uncertainty is already creating hundreds of millions of dollars of additional debt costs.
That figure is Edison's assessment of the financial effect and should not be confused with a CPUC-approved customer charge.
Possible financial chain:
Greater wildfire liability uncertainty → higher perceived utility risk → more expensive financing → higher cost of grid investment → potential pressure in future rate proceedings.
Does Higher Utility Debt Cost Automatically Raise SCE Bills?
No.
SCE cannot simply add any financing cost it chooses to residential bills.
Southern California Edison is regulated by the California Public Utilities Commission.
Revenue requirements, cost of capital and many other customer-rate changes go through regulatory processes.
That means the connection between utility borrowing costs and an individual customer's bill is indirect and subject to regulatory review.
Higher financing costs can still matter because capital-intensive utility infrastructure ultimately has to be financed somehow.
SCE Already Has Wildfire-Related Costs in Its Rate Structure
Wildfire costs are not only a future issue.
SCE's own June 2026 rate advisory stated that its June 1 rate adjustment included an increase in revenue associated with its Wildfire Liability Self-Insurance mechanism.
Other decreases in the same rate adjustment offset that increase, resulting in a small overall residential rate reduction at the time.
SCE listed an average residential electricity rate of approximately 34.4 cents per kWh after that June adjustment.
Actual household pricing varies by rate plan, usage, baseline allocation, season and Community Choice Aggregation participation where applicable.
NationPro USA provides more rate data in its California electricity rates 2026 guide .
The Eaton Fire Has Added New Pressure to the Debate
The wildfire liability discussion became more closely tied to Southern California Edison following the January 2025 Eaton Fire in Los Angeles County.
In August 2026, the Los Angeles County Fire Department released the results of an investigation conducted jointly with CAL FIRE.
Investigators concluded that the fire was caused by electrical arcing events on an out-of-service Southern California Edison transmission tower.
The Eaton Fire killed 19 people and destroyed or damaged more than 9,000 homes and businesses.
The official cause finding does not by itself resolve every legal question surrounding negligence, damages, regulatory treatment or cost recovery.
Litigation and other proceedings involving the fire remain separate from the determination of the physical ignition source.
Why the Eaton Fire Matters to the Wildfire Fund
Large wildfire claims can draw on insurance, utility resources and California's Wildfire Fund depending on eligibility and regulatory treatment.
That is one reason investors, utilities and policymakers are focused on the long-term capacity of the fund.
If the fund's financial resources become strained, questions arise about how future wildfire claims would be financed and how much risk utility shareholders, insurers, customers and other parties would ultimately bear.
Those questions are at the center of the policy dispute that remained unresolved when the 2026 legislative session ended.
Why Wildfire Liability Reform Is Contested
There is broad agreement that catastrophic wildfire losses need a workable payment system.
The disagreement concerns how financial responsibility should be divided.
| Stakeholder Concern | Main Issue |
|---|---|
| Utilities and investors | Large uncapped wildfire exposure can weaken credit quality and make utility financing more expensive. |
| Fire survivors | Changes should preserve access to fair compensation and avoid making recovery harder after catastrophic fires. |
| Consumer advocates | Ratepayers should not automatically absorb costs that would otherwise fall on utilities or shareholders. |
| Insurers | Restrictions on insurers recovering wildfire losses from responsible parties could shift costs into insurance premiums. |
| State policymakers | The state is trying to balance wildfire recovery, utility financial stability, grid investment and electricity affordability. |
That mix of competing interests helps explain why a final agreement proved difficult during the 2026 session.
Could California Still Revisit Wildfire Liability in 2026?
Edison has continued to push for action.
Pizarro said in late September that a special legislative session before the end of 2026 remained a possibility.
Whether policymakers reach a new agreement, and what such an agreement would contain, remains uncertain.
Homeowners should therefore avoid treating any proposed liability framework as current law until legislation is actually enacted.
California Provided Bill Credits in August and September
The wildfire debate is occurring while electricity affordability remains a statewide concern.
In 2026, California shifted electric Climate Credits for customers of SCE, PG&E and SDG&E into the summer months when bills are often higher.
SCE residential customers received a $36 California Climate Credit in August and another $36 credit in September.
Across the three large investor-owned utilities, the state announced approximately $886 million in electric-bill credits, averaging roughly $75 per household.
These credits provide temporary bill relief, but they do not determine the underlying long-term cost of electricity.
What SCE Customers Should Watch
Homeowners do not need to follow every utility finance development, but several items can affect the longer-term rate discussion:
- future California wildfire liability legislation
- the financial condition of the Wildfire Fund
- SCE credit-rating changes
- CPUC cost-of-capital proceedings
- SCE general rate cases
- wildfire self-insurance costs
- grid-hardening and wildfire-mitigation spending
- approved customer-rate changes
NationPro USA explains the broader wildfire-cost issue in its guide to California wildfire costs and electricity rates .
What Does This Have to Do With Rooftop Solar?
Wildfire liability reform does not directly determine whether a particular homeowner should install solar.
It is one of many factors that can affect the long-term economics of utility electricity.
A homeowner who relies entirely on grid electricity purchases electricity at the applicable utility rate.
A correctly sized rooftop solar system can generate part of the home's electricity onsite, reducing the number of kilowatt-hours that need to be purchased from SCE.
Solar does not eliminate every utility charge, remove the home from the grid or guarantee savings.
Project price, financing, solar production, household electricity use and the applicable SCE rate plan all affect the result.
Battery Storage Adds Another Option
Battery storage can change when solar electricity is used.
Instead of immediately exporting all unused daytime solar production, a homeowner may store some of it for later household use.
Depending on the rate plan and system configuration, that may reduce selected evening grid purchases.
A correctly configured battery can also provide backup electricity during an outage.
Learn more in NationPro USA's home battery storage and solar guide .
Solar Does Not Guarantee Protection From Future Utility Rate Changes
Homeowners should be careful with claims that solar completely eliminates exposure to SCE rate increases.
Most grid-connected solar homes remain SCE customers.
They can still pay fixed charges, imported electricity charges and other applicable costs.
What solar can potentially change is the amount of electricity the home needs to purchase from the utility.
The value of that reduction should be calculated using the home's actual electricity use and a realistic solar-production estimate.
Compare Long-Term Electricity Costs With Project-Specific Solar Math
Headlines about future utility rates should not replace a property-specific calculation.
An SCE homeowner comparing solar should review:
- at least 12 months of electricity use when available
- current SCE rate plan
- Time-of-Use periods
- cash system price
- financing costs
- expected annual solar production
- battery cost and usable capacity
- future EV or heat-pump loads
- remaining utility purchases after solar
- expected length of homeownership
NationPro USA's homeowner solar planning guide covers additional items to review before selecting a system.
SCE Wildfire Liability and Electricity Rate FAQs
Did California pass wildfire liability reform in 2026?
A late-session wildfire compromise known as Senate Bill 492 was not brought to a final Assembly vote. A broader utility-liability framework sought by the governor and investor-owned utilities also did not become law during the regular 2026 legislative session.
Does the failed wildfire legislation mean SCE rates are increasing now?
No specific SCE rate increase was automatically created by the legislation's failure. Edison has warned that continued wildfire liability uncertainty can increase financing costs, but customer rates remain subject to CPUC regulatory processes.
Why would a utility credit rating affect electricity rates?
Electric utilities borrow large amounts of money to finance grid infrastructure. A weaker credit profile can make borrowing more expensive. Those financing costs can become part of utility revenue and rate proceedings, subject to CPUC review.
What happened to SCE's credit outlook?
Reporting in September 2026 said Fitch changed its outlook for Edison International and Southern California Edison from stable to negative following the stalled wildfire reform effort.
How large is SCE's wildfire shareholder liability cap?
Edison has described its current statutory exposure under the applicable 20% equity-rate-base formula as roughly $4 billion. The exact calculation can change as the utility's equity rate base changes.
What caused the Eaton Fire?
Los Angeles County Fire Department, after an investigation conducted jointly with CAL FIRE, concluded in August 2026 that the Eaton Fire was caused by electrical arcing events involving an out-of-service Southern California Edison transmission tower.
Does the Eaton Fire cause finding mean SCE has been found legally negligent?
No. Identifying the physical ignition source is different from resolving civil negligence, damages, regulatory cost recovery and other legal questions. Those matters are handled through separate legal and regulatory processes.
How much was the SCE California Climate Credit in 2026?
Eligible SCE residential customers received a $36 California Climate Credit in August 2026 and another $36 credit in September 2026.
Can solar reduce exposure to SCE electricity costs?
Solar can reduce the amount of grid electricity a home needs to purchase when rooftop generation serves household demand. It does not eliminate every SCE charge or guarantee a particular financial saving.
Can battery storage help an SCE customer?
Depending on the home and rate plan, battery storage can keep some solar electricity for later use, reduce selected grid purchases and provide backup power when configured for outage operation.
Compare Your SCE Electricity Costs With Home Energy Options
NationPro USA can review your SCE electricity usage, rate plan, roof, solar production potential and battery goals so you can compare your current grid costs with a system designed around your home.
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