Edison International

We believe AB 1054 will enhance Edison's regulatory construct by allowing the company to use the wildfire fund as a source of liquidity, a predetermined cap that limits Edison's liability, and revised standards of a utility's reasonable conduct that we believe will increase the likelihood that Edison will recover future wildfire costs from ratepayers. However, the wildfire fund does not automatically replenish. If the fund depletes, Edison loses the credit benefit of using the wildfire fund as a source of liquidity, and more importantly, it also loses the credit protection of the liability cap. Also affecting Edison's credit quality is that AB 1054 directly associates Edison's credit quality to the operations of its electric utility peers in California. Even if

...Wildfires have already occurred in the Western U.S. this year. Although the early 2020 wildfires in the Western U.S. have not yet been catastrophic in terms of property damage or fatalities, and they have not occurred in Edison International's service territory, they could be indicative of a longer wildfire season. In addition, rainfall this year in California has been below average, potentially signaling a longer wildfire season, which, in our view, could increase the possibility of a catastrophic wildfire. Although the 2017 and 2018 rainfalls were below the historical average, the 2019 rainfall was average, and we believe that effectively shortened the wildfire season. The COVID-19 pandemic presents an additional risk for the 2020 wildfire season because it could challenge emergency response time. Assembly bill (AB) 1054 directly associates Edison's credit quality with the operations of its electric utility peers in California. Although AB 1054 reduces Edison's credit risk exposure related...

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