Southern California Edison (SCE), a subsidiary of Edison International, has denied any involvement in the recent wildfires that have devastated Los Angeles. The company has received notices from insurance companies to preserve evidence related to the Eaton Fire, which is still burning in the city. However, SCE maintains that no fire agencies have suggested a connection between its electric facilities and the fire's ignition.

SCE's filing with California regulators was triggered by online publications that "seemingly suggest" the group's equipment may have been associated with the fire's ignition. The utility stated that it did not find any interruptions or anomalies in its transmission lines until more than an hour after the reported start time of the fire, according to its preliminary analysis.

The wildfires in Los Angeles have been catastrophic, with two massive fires, the Palisades Fire and the Eaton Fire, consuming more than 34,000 acres (13,750 hectares) and leading to 10 deaths. The fires have collectively destroyed over 10,000 homes and other structures, making them the most destructive in Los Angeles history. Private forecaster AccuWeather has estimated the damage and economic loss at $135 billion to $150 billion, portending an arduous recovery and soaring homeowners' insurance costs.

If Edison is found liable for the wildfires, the potential financial implications could be substantial. California's inverse condemnation law holds utilities strictly liable for property damage caused by their power lines and equipment, irrespective of fault. This law has previously driven major utilities, such as PG&E, into bankruptcy following a single wildfire. The 2018 Camp Fire caused $16.5 billion in damage, highlighting the potential costs of a major wildfire. Edison's insurance fund has total assets of $11.4 billion, which may not be sufficient to cover the costs of a major wildfire.

Edison has negative free cash flow, and its $18.1 billion equity could be wiped out by a single catastrophic event. The company's market capitalization is valued at $27 billion, but this could be significantly impacted if Edison is found liable for the wildfires. Edison has stated that it will seek to recover uninsured costs resulting from the 2017/2018 Wildfire/Mudslide Events through electric rates, subject to approval by regulators. However, this process may take time and is not guaranteed.

In conclusion, while Edison has denied any involvement in the LA wildfires, the potential financial implications for the company if it is found liable are significant. The ongoing investigations will determine the final outcome, and the company's financial stability may be at risk if it is held responsible for the devastating fires.