CNBC Sep 21, 2026
With Pedro Pizarro, CEO of Edison International
Southern California Edison and its parent are at the lowest credit ratings that still count as investment grade, and Fitch moved the outlook on them to negative last week.
Pedro Pizarro's argument is that this is not a shareholder problem. A downgrade raises the cost of debt, and the cost of debt is a pass-through, so the bill for California's missing wildfire-liability framework arrives on customers' statements.
"So today, Southern California Edison and EIX are at the lowest possible investment grade credit ratings. Fitch last week just changed our outlook to negative."
Pedro Pizarro, CEO of Edison International, on CNBC, runs the parent of Southern California Edison, which the programme said serves some 15 million people across the state, and he was asked what investors are supposed to do with a utility whose wildfire liability has no ceiling.
The full segment is covered here so you can skip it.
Here are the 4 numbers that matter.
Key Takeaways
Pizarro says utilities are collectively investing something like $1.4 trillion over the next five years
His advice to the industry is to keep regulators and communities in the planning, and to make data centers pay the costs they create
Southern California has inference data centers, not training ones, so the load growth is smaller than the national story suggests
Done right, Pizarro says new data center load reduces pressure on system average rates rather than raising them
Edison International still holds a 5% to 7% EPS growth commitment through 2030, even with no cap on wildfire liability
Fitch moved the outlook to negative on a company already at the bottom of investment grade, and the higher cost of debt passes straight to customers
Pizarro puts the customer exposure at hundreds of millions of dollars or more if the framework is not fixed
1. Inference, Not Training
The segment opened on data center pushback in California, with towns and residents worried about energy costs and pollution. Pizarro's first move was to size his own exposure to it, which is smaller than the national argument implies.
Southern California gets the small half of the build-out
In Southern California, we don't have the same sort of growth in data centers. We don't have training centers, but we still have inference centers.
Pedro Pizarro
He said communities are focused on affordability and reliability, and called that appropriate. Then he made the case that a utility's economics run the other way from the public assumption: a big new customer spreads the fixed cost of the system across more kilowatt-hours sold.
New load can cut the average bill rather than raise it
We do believe that done right, data centers can actually be helpful in adding load and therefore reducing pressure on system average rates. But clearly, developers need to do a good job in engaging with the communities.
Pedro Pizarro
2. A $1.4T Five-Year Plan
Asked what advice he would give utilities in parts of the country where the backlash is worse, Pizarro answered with the scale of what the industry is committing.
The industry's own capital plan, as he counts it
My colleagues and I are collectively investing something like $1.4 trillion over the next five years.
Pedro Pizarro
The advice that goes with it is procedural rather than political: keep working with communities and with regulators, bring communities into the grid expansion planning rather than presenting it, and push for rules that make data centers carry the costs they create while still recognizing that the load itself is useful. He framed all of it as what utility chief executives tell each other through their trade association.
3. No Cap On Wildfire Risk
The second host put the investor question directly: California failed to pass legislation capping utilities' liability for future wildfires, so why would anyone want exposure to that risk. Pizarro did not dispute the premise. He answered with the growth commitment the company has not withdrawn.
The number Edison is still standing behind
We've committed ourselves to our 5 to 7% EPS annual growth rate through 2030.
Pedro Pizarro
What he wants from the state is a framework rather than a bailout, and he was careful to say the problem is not only the utilities'. He pointed at the review the California Earthquake Authority was tasked with: it concluded that more work is needed across the economy in reducing fire risk and shoring up the insurance market, not just at the power companies. Legislators, on his account, have taken good steps over the years and have not finished the job.
4. Lowest Investment Grade
Asked whether Californians feel they are paying for the utility's liability protection, and what the options are over the next year or two with no cap in place, Pizarro pointed at the rating agencies as the thing already pricing it.
Where the credit sits today
So today, Southern California Edison and EIX are at the lowest possible investment grade credit ratings. Fitch last week just changed our outlook to negative.
Pedro Pizarro
His point is what happens next in the bill, not in the share price. A weaker rating raises the company's cost of debt, and that cost is a regulated pass-through to the people who buy the electricity.
The customer pays for the missing framework
And so this could mean hundreds of millions of dollars or more in cost exposure for customers if the framework isn't addressed.
Pedro Pizarro
That is the argument he took back to Sacramento: the fix has to cover liability at the utilities, the insurance market and the building market together, rather than being written as a favor to one industry.
Bonus Insights
He was in New York for Climate Week
The host noted that Pizarro was in town for Climate Week, and said the programme normally has him on to talk about the grid and data centers. The interview went to the grid anyway.
The programme's figure for the customer base
Southern California Edison serves some 15 million people across the state, on the introduction's count. That number is the show's, not Pizarro's.
Pizarro's bottom line is that the wildfire question and the data center question are the same question about who pays: new load can lower average rates if the rules make it carry its own costs, and an uncapped liability raises everyone's rates through the cost of debt long before any fire starts.
Products, Companies & Tools Mentioned
Edison International (Pizarro's company, the NYSE-listed parent of Southern California Edison; at the lowest investment grade rating with a negative outlook, and still committed to 5% to 7% annual EPS growth through 2030)
Southern California Edison (The utility itself, serving some 15 million people on the programme's figure, with inference data centers rather than training centers on its system)
Fitch Ratings (Changed its outlook on the company to negative the week before the interview)
California Earthquake Authority (Tasked by the state with working out what else is needed; concluded that fire-risk reduction and insurance-market repair are needed across the economy, not only at utilities)
Listen to the full episode
🔴 YouTube
Watch the full episode:
If this was worth your time, send it to someone who has to have a view on this.
Get the latest market chatter as it happens: