Utility company’s power shutoff announcements lead to legal action by group of affected customers
The recent Eaton fire in Los Angeles County has triggered a federal class-action lawsuit against Southern California Edison (SCE). An issue brought up in the lawsuit is whether the company uses public safety shutoffs to boost its stock prices artificially. SCE implemented the strategy of shutting down transmission circuits during windy and hot conditions in Southern California in late 2019 with the intention of preventing wildfires and ensuring that the electric system does not become a source of ignition.
SCE justifies these safety shutoffs as a last-resort measure to protect the community and its customers. However, these moves have come under scrutiny in light of the Eaton fire. In the lawsuit filed in February 2025, Douglas Elliott, a Los Angeles County resident, alleges that SCE made false and misleading statements in connection with the Eaton fire to inflate the company’s stock price, a violation of the Securities Exchange Act of 1934.
Following the fire outbreak on January 7 in the Altadena/Pasadena area, SCE claimed that its distribution lines to the west of Eaton Canyon were de-energized as part of the Public Safety Power Shutoff program. However, despite warnings of potentially damaging wind gusts of up to 80-100 mph by the National Weather Service, SCE chose to keep multiple parts of its distribution circuit in and around Eaton Canyon energized. Areas like Altadena and Pasadena were flagged as the most severe locations of concern, as per the weather service’s Red Flag Weather Matrix.
Elliott’s lawsuit points out discrepancies in SCE’s statements regarding the deactivation of the distribution lines and provides witness statements and photographs of fire at the base of an SCE tower to contradict the company’s claims. While SCE has not responded to the lawsuit, it informed the California Public Utilities Commission that an analysis showed no operational anomalies in the Eaton Canyon area leading up to the fire’s reported start time. Subsequently, SCE acknowledged investigating a potential link to the Eaton fire.
During this period of scrutiny, SCE’s stock plummeted from $65.00 on January 10 to $51.16 on February 6, indicating the impact of the unfolding events on investor confidence. Elliott seeks to represent SCE shareholders from 2021 onwards, seeking financial compensation, interest, and coverage of legal expenses for the plaintiffs if the court rules in his favor. As the legal battle continues, the allegations against SCE are being closely monitored to determine the extent of corporate responsibility and accountability in ensuring public safety amidst the risks of wildfires.