Board of Equalization denies Southern California Edison’s 2025 unitary-value appeal, 4–1

The California Board of Equalization on Wednesday denied Southern California Edison’s appeal of its 2025 board‑adopted unitary value, voting 4–1 to affirm the staff‑recommended figure.

The hearing, which filled much of the board’s Nov. 19 session in Sacramento, centered on whether staff properly reconciled two different value indicators — a historical cost less depreciation (HCLD) approach and an income (capitalized earning ability) approach — and whether several wildfire‑related costs should reduce the taxable unitary value.

Petitioners’ opening: assets that do not earn a return should be excluded

Marty Decassian, counsel for Southern California Edison, told the board the central question is ‘‘what would a reasonably prudent buyer pay for Edison’s property?’’ He argued that AB 1054 wildfire mitigation capital (which the petitioner says it is barred from earning an equity return on) and a one‑time $2.4 billion initial contribution to a wildfire insurance fund should not be included in the HCLD indicator or should be accounted for in the income approach. ‘‘If you have a ticket to participate in the wildfire insurance fund,’’ Decassian said, ‘‘a reasonably prudent buyer would absolutely consider that’’ and the associated value should be adjusted accordingly.

Decassian pressed the board to either remove non‑earning AB 1054 expenditures from the HCLD, annualize or treat the wildfire‑fund contribution as prepaid insurance, and deduct ongoing wildfire claims liabilities that continue to affect Edison’s cash flows.

Staff response: mitigation, PUC action and market signals support current approach

BOE staff, represented by David Luhan and other SAPD appraisers, countered that staff had already accounted for wildfire risk where appropriate and had applied targeted adjustments. Luhan pointed to public signals — including PUC findings, Fitch and S&P commentary, and Edison’s own public statements — that, in staff’s view, indicate the cumulative mitigation efforts have meaningfully reduced wildfire probability. "By petitioner's own calculations... the probability... is reduced by 85 to 88%," Luhan said, noting staff also applied an equity risk premium and removed the forbidden return‑on portion of AB 1054 capital from the rate base where required.

Legal and technical dispute over method and weighting

The hearing turned on technical appraisal points and the board’s appraisal rules. Decassian said the large divergence between HCLD (about $43.7 billion) and the income indicator (about $35.6 billion) — roughly an $8 billion or ~23% gap — requires either explicit reconciliation or a change in the weighting that staff applies (currently 75% HCLD/25% income in these cases). Staff argued divergences can arise for multiple reasons and that the HCLD indicator remains the more reliable measure for regulated utility property, particularly given the quantity and provenance of cost information.

Board members probed both sides on the evidence supporting changes to the weighting, the treatment of extraordinary or one‑time items, and whether bond and insurance market behavior should alter valuation methodology.

Vote and next steps

Vice Chair Sally Lieber moved to deny the petition; Member Ted Vasquez seconded. In roll call, Chair Gaines voted No; Vice Chair Lieber, Member Vasquez, Member Schaffer and Controller Cohen voted Aye. The motion to deny the petition passed 4–1, meaning the board affirmed the 2025 board‑adopted unitary value. Under Revenue & Taxation Code section 40, the appeals attorney will draft the written decision memorializing the board’s action.

Why this matters

The decision preserves the board‑adopted unitary value for one of the state’s largest investor‑owned utilities and reflects an ongoing, technical dispute about how to reflect wildfire‑related costs and risk in property tax valuations. The ruling affects state tax rolls and informs how regulated utilities’ wildfire mitigation investments and insurance arrangements will be treated going forward.

The board’s written decision will provide the legal rationale and is expected to follow in the coming weeks.