A potential finding that Southern California Edison's equipment ignited the deadly Eaton fire could derail the state's ability to shield utilities from mounting wildfire losses.

The January blaze, which killed 17 people and destroyed more than 9400 structures, remains under investigation.

Residents, Los Angeles County and cities such as Pasadena and Sierra Madre already have filed lawsuits against Edison.

In its lawsuit, LA County said Edison deliberately prioritized profits over safety, despite knowing the extreme fire risk its equipment posed as the region faced an exceptionally strong windstorm.

An Edison spokesperson said the company was reviewing the lawsuit and would address it through the appropriate legal process.

In a February 6 report to the State Public Utilities Commission, Edison said its investigation into the cause of the fire was ongoing, but acknowledged that videos from external parties had suggested a possible link to its equipment.

While state and county fire investigators have not found Edison responsible for the Eaton fire, the lawsuits fuel concerns about Edison's potential liability for the deadliest and most destructive wildfire since the 2018 Camp Fire.

That fire bankrupted the state's largest utility, Pacific Gas and Electric, and led to a sweeping state overhaul of how utilities prepare for and pay for wildfire damage.

Lawmakers created a $21 billion wildfire fund subsidized by Wall Street investors and California utility ratepayers to help PG&E exit bankruptcy and protect utilities from being financially threatened in the future by the wildfires they cause.

Six years later, experts warn that damages from January's LA fires could deplete the fund, raising doubts about the fund's ability to cover future wildfire losses.

For CalMatters, this is Alejandro Lazo with reporting by Sergio Olmos and Malena Carollo.