Southern California Edison sold $1.95bn of Woolsey Fire bonds on Tuesday, and the charge that repays them runs on customer bills until 2061
SCE Recovery Funding LLC issued $1,953,948,000 of senior secured recovery bonds on Tuesday. They are obligations of a subsidiary. The buyer of the longest tranche is scheduled to be repaid in June 2059, with a final maturity date of June 15, 2061, and every dollar of it comes back through a charge on electricity bills across Southern California Edison's service territory. That charge is called a fixed recovery charge, it is collected per kilowatt hour, and under the financing order authorizing it there is no limit on its amount.
The bonds came in three tranches. A-1 is $600,000,000 at 5.388 percent, with an expected weighted average life of 10.09 years and a final maturity date of December 15, 2045. A-2 is $645,000,000 at 6.036 percent, 22.38 years, and December 15, 2054. A-3 is $708,948,000 at 6.093 percent, 30.07 years, and June 15, 2061. Interest accrues from July 28 and is paid twice a year, and the first payment is expected on June 15, 2027.
The prospectus states the purpose without ornament. The issuance lets SCE recover and refinance a portion of certain costs recorded in its Wildfire Expense Memorandum Account relating to the Woolsey Fire, costs that are subject to a prior settlement decision of the California Public Utilities Commission, together with certain interim financing costs and the financing costs of issuing the bonds. The account is known as WEMA. In its definitions the prospectus is narrower still: WEMA costs are the costs relating to the Woolsey Fire approved for recovery through securitization under decision D.25-12-023, issued on December 26, 2025.
In January 2026 SCE applied to the commission for a financing order seeking recovery of $1.639bn of those costs. The commission issued the order on May 23, 2026, authorizing bonds in an approximate aggregate principal amount of $1.951bn. That total is the sum of the $1.639bn in recovery costs, an estimated $299.2m in pre-securitization debt, and an estimated $12.7m in financing costs relating to the issuance. The order became final and no longer subject to appeal on June 2. It permits up to three series on or before December 31, 2027.
The charge is nonbypassable. Under the Wildfire Financing Law, which is Article 5.8 of Chapter 4 of the California Public Utilities Code, it must be paid by all existing and future customers in the service territory as it stood on the date of the financing order, and customers with departing load must pay it on that load. Customers enrolled in the CARE or FERA programs are exempted. The law requires the charge to be trued up at least annually, and the commission has authorized adjustments more frequently than that, which together with accounts held under the indenture is the credit enhancement the bonds rest on. Any amount collected after the bonds and their operating expenses are paid in full is credited back to customers.
The total initial price to the public was $1,953,846,836. Underwriting discounts and commissions came to $7,034,213 and other expenses are estimated at $6,512,583, leaving proceeds to the issuing entity before expenses of $1,946,812,623. Norton Rose Fulbright US LLP provided the opinions on legality, on federal tax matters, and on United States and California constitutional matters.
One thing the document does not do is resolve anything about the more recent fires. The Eaton Fire, which the prospectus says ignited in SCE's service area in Los Angeles County in January 2025 under an extreme Santa Ana windstorm, appears only in the risk factors, as an illustration of the kind of event that can reduce electricity sales and therefore slow collections on these very bonds. No part of this issuance recovers costs from it.
