Moody’s says LA fire could pose a threat to Southern California Edison.

NEW YORK (Reuters) – The devastating Eaton Fire in central Los Angeles County poses a credit risk to Southern California power supplier Edison, which operates power lines in the area where the blaze first started, Moody’s Ratings said in a report on Thursday.

Why is it important?

In the year Investigators have not released a cause for the Eaton Blaze fire, which has burned more than 14,000 acres since Jan. 7. While it is unclear what caused the fire, several lawsuits filed against SCE this week accuse Big Southern-owned equipment. California electricity to light starter fires.

SCE, the parent company of Edison International, said it had found no evidence that the equipment was to blame for the fire.

What’s next?

Moody’s said it believes the state’s wildfire fund and California utilities’ ability to recover fire-related costs support SCE’s credit. That could change if there is enough evidence to prove the SCE infrastructure fire happened, making the company more vulnerable to lawsuits, Moody’s said. Other factors that could hurt SCE financially include depleted wildfire funds, compensation for some wildfire damage claims, or if regulatory and political support for California’s utilities environment begins to wane, Moody’s said.

Key quotes

“We may change our outlook, expecting more frequent and more severe wildfires to pose a greater risk to the company’s credit profile,” Moody’s said.

(Reporting by Leila Kearney; Editing by Bernadette Baum)