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The deadly Eaton fire that scorched through Altadena, CA, in January could deplete the state’s $21 billion wildfire fund if a local utility is found to be responsible for sparking the blaze.
The nine-member California Catastrophe Response Council, which includes Gov. Gavin Newsom and Insurance Commissioner Ricardo Lara, is scheduled to meet on Thursday to discuss insurance claims related to the Eaton fire and how they might affect the fund created to shield utility companies’ coffers in case of a costly disaster.
Southern California Edison (SCE), which serves roughly 15 million customers, is facing a growing number of lawsuits contending that the utility’s aged, out-of-use power lines had somehow ignited the fire that killed 19 people and destroyed or damaged more than 6,100 homes in and around Altadena in the first days of 2025.
If the investigation into the cause of the wildfire, which is currently ongoing, finds SCE liable, “the resulting claims may be substantial enough to fully exhaust the Fund,” officials who administer the fund wrote in a draft of the annual report to the California Catastrophe Response Council and the Legislature.
The draft was made public online ahead of the Council’s meeting this week.
Council members have voiced concerns that, should SCE be identified as the culprit, the utility would have no financial incentive to be cost-conscious when settling claims.
(Mario Tama/Getty Images)
“Are we impressing on the utilities that they need to settle claims with diligence?” an unidentified Council member wondered, according to recently released notes. “Since the claims they settle are just passed on to us, they don’t have much incentive to keep claims low.”
Simply put, the fear is that the power company would cover the claims upfront and then recoup its losses, whatever they might be, from the public fund.
When reached for comment on Wednesday, SCE spokesperson Kathleen Dunleavy stressed to Realtor.com® that the investigation into the Eaton fire is underway and could take 12 to 18 months.
“In terms of the fund assets, a healthy, sustainable wildfire fund is essential to help the people recover and rebuild,” Dunleavy said.
Pressed further, the company rep added that the fund “should go to those directly affected by the wildfire.”
Meanwhile, a spokesman for the California Earthquake Authority, which oversees the Council, declined to comment. “We generally don’t try to predict in advance or color the conversation Council members will have regarding the meeting materials,” the spokesman said in an email to Realtor.com
Property Claims Service, a part of the data analytics company Verisk, estimated insured losses from the Eaton fire alone at $15.2 billion, according to the state documents.
A report from the UCLA Anderson Forecast, most recently updated in March, estimated total property and capital losses from both the Eaton fire and the Palisades fire, which devastated parts of Los Angeles, at between $76 billion and $131 billion—with insured losses estimated up to $45 billion.
The wildfire fund was created in 2019 with the goal of protecting California’s three biggest private utilities—SCE, PG&E, and San Diego Gas & Electric—from the risk of bankruptcy in the event their equipment ignited a fire, according to the Los Angeles Times.
On a call with investors earlier this year, Edison International CEO Pedro Pizarro expressed “confidence in the fund,” which has been largely untouched by the trio of private utilities that have contributed billions to it over the past six years.
Notably, the fund does not cover claims related to the Palisades fire, because the hard-hit community of Pacific Palisades relies on the Los Angeles Department of Water and Power for its utility services and not on private providers like SCE.
Faced with a potential depletion of the fund, Newsom and his fellow Council members were said to be trying to find ways to strengthen the balance sheet.
The Los Angeles Times reported last month that one proposal under consideration is having the utilities’ customers foot the bill to the tune of billions of dollars.
New fire maps leave out much of Altadena
(Cal Fire)
On Tuesday, the Los Angeles County Board of Supervisors adopted new fire zones that leave out about half of Altadena’s burn area, according to the Long Angeles Daily News.
As a result of this move, some 60% of Altadena’s residents who lost their homes in the Eaton fire will not be required to adhere to the state’s highest fire-safety codes when rebuilding. The decision affects an estimated 3,500 homes.
Those homeowners also will be exempt from having to clear their property of debris or submit to annual brush inspections.
In April, the Insurance Institute of Building and Home Safety released a study that recommended expanding the Altadena fire zone to include the entire Eaton fire burn area.
The board defended its decision to disregard the recommendation, saying that the Los Angeles County Fire Department’s maps were created based on careful review and research rooted in scientific modeling and historical burn data.
California looks to speed up rebuilding
Since the fires were put out in late January, Los Angeles County, which oversees the recovery process in Altadena and other unincorporated locales, has received more than 1,100 applications for rebuilding and so far has approved 108 permits, according to the agency’s online permitting dashboard.
In the unincorporated area impacted by the Palisades fire, just 14 permits have been issued by the county as of Wednesday.
In Pacific Palisades, the majority of which is subjected to the authority of the Los Angeles Department of Building and Safety, more than 85% of the damaged properties have been cleared of debris and nearly 300 rebuilding plans have received the green light to date.
On Wednesday, Los Angeles Mayor Karen Bass issued two new executive actions aimed at further streamlining the permitting process.
The first executive order aligns with Newsom’s recent order, which expanded the scope of single-family homes eligible for the state’s emergency suspension of the California Environmental Quality Act and the California Coastal Act.
The second order launches a pilot program for pre-approved, code-compliant designs for single-family homes in a bid to fast-track rebuilding.
“With debris removal months ahead of expectations, construction underway, and new action taken today to further streamline the rebuilding process, we continue to push forward in our all out effort to get families home,” Bass said in a statement.