Edison Drops on Willful Misconduct Allegations in Eaton Fire Case

Edison International shares fell over 3% on Tuesday after short seller Muddy Waters said it had uncovered new information suggesting the utility acted with “conscious” or “willful” disregard in the Eaton Fire.

Related: Southern California Edison Chief Warns Wildfire Impasse Risks Higher Customer Bills

The investment firm said Edison could face at least $4 billion in fire-related damages, with potential liability reaching about $20 billion if a court determines the firm’s conduct amounted to willful misconduct.

Here are more details:

• Muddy Waters said the utility’s Southern California Edison unit failed to fix deficiencies in a wildfire risk model despite allegedly knowing for about five years that it could not adequately account for high-wind conditions.
• The unit faces multiple lawsuits alleging its electrical equipment started the Eaton Fire, which ignited on January 7, 2025, in the Los Angeles area.
• Edison has previously said it is cooperating with investigations into the cause of the fire and denied negligence or wrongdoing.
• Muddy Waters said the utility’s failure to address the modeling issues increased wildfire risks during extreme wind events and was a factor in its assessment of the company’s potential exposure.
• Edison International did not immediately respond to a Reuters request for comment.

(Reporting by Menon in Bengaluru; Editing by Vijay Kishore)