Edison stock plunges 23% as Sacramento weighs wildfire liability Play

Southern California Edison took a bloodbath on Wall Street on Monday. The price per share for Edison International, the parent company of SCE, plummeted from 70 to 54. That's down 23 percent, the worst drop in more than 25 years.

SCE and Pacific Gas and Electric are the two biggest power companies in California, and together they have lost more than 20 billion in value over the past four trading days. The impact of the stock decrease on Malibu ratepayers may be severe. The chief executives of the two companies have sent a letter to lawmakers that threatens higher utility bills, job losses, and less investment in California.

Edison is desperate for the California legislature to stay in session in Sacramento to bail it out. The legislative session technically ended at 12:01 a.m. Tuesday, but lawmakers are set to return Tuesday to change some parts of the state's wildfire liability system — the rules that affect how a power company has to pay out money if they cause a fire.

The law they'll be voting on Tuesday would, among other things, set limits on some attorney fees. It would also set limits on the pay given to utility chief executive officers if their power companies negligently start a wildfire. But it's the issue of subrogation that's the big hang-up. Subrogation is the duty of a power company to reimburse an insurance company for the money that it pays out to fire victims. The utility companies want the legislature to eliminate subrogation, or at least reduce it significantly.

Insurance companies have lobbied hard against the subrogation changes. They warned that absorbing utility-caused wildfire costs would cause insurance rates to be increased out of sight, or cause insurance companies to leave high fire risk areas altogether.

For weeks, the governor has been pushing to limit or eliminate the power companies' financial liabilities from subrogation. Democrats in the state legislature, though, have refused to go along with that. Tuesday, legislators will have a final vote on a wildfire bill that left out the liability protections — subrogation — that Wall Street investors have been counting on.

Edison International's boss, Pedro Pizarro, predicted last week that the stock market would tank if the legislature failed to shift the power companies' burdens elsewhere. Monday, his bad prediction became really bad: a 23 percent drop in value in one day.