Edison International (EI) CEO Pablo Pizarro last Thursday (July 29) previewed what could be a prolonged fight with California regulators over recovery of costs by utilities for supporting statewide efforts to curb the impacts of wildfires and climate change.

During a 2Q2021 earnings conference call, Pizarro made it clear that EI utility subsidiary Southern California Edison Co. (SCE) was not going to accept proposed cuts in its fire mitigation plan that are part of a general rate case proposal being reviewed by the California Public Utilities Commission (CPUC).

Pizarro further warned that the same debate over affordability issues in addressing climate change are likely to arise despite the commitment by California officials to take extraordinary steps to become a carbon-free state by 2050. He argued that the CPUC is ignoring SCE’s success in lowering wildfire risk for its customers.

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“It is important that the CPUC think of ‘affordability’ broadly, not just in the near-term, but over time,” Pizarro said. “There is a balancing act that we and the regulators must do; it’s a tough job.”

Both Pizarro and CFO Maria Rigatti said over time more electrification is going to drive down electricity costs for customers, and Rigatti said some CPUC members recognize that fact. “Using clean electricity to electrify a lot of the economy is the cheapest way for the economy to get carbon-free, but this will put pressure on the electric bills,” Pizarro said.

He contends that bills may run a little above inflation in order to build the infrastructure that will be needed to decarbonize the energy sector. “Part of our job over the next two decades is to constantly provide good educational materials and analysis about not just the cents-per-kilowatt-hour world but also the world of dollars-per-ton of emissions removed,” Pizarro said.

SCE is stressing the need for fair, flexible regulation that recognizes cost-of-service metrics, according to Pizarro. This is underscored in the utility’s widespread use of covering conductors in high fire risk areas as part of the “hardening” of the grid, he said. “Circuits with covered conductors have experienced 69% fewer faults than those that are uncovered,” he said.

For 2Q2021, EI reported core earnings of $356 million (94 cents/share), compared with $375 million ($1) for the same period last year.