SCE's Phase 2 proceeding sets the marginal costs, revenue allocation, and rate designs that determine how the utility's revenue requirement lands on each customer class. For large industrial customers, the technical details here are the rate case.
What we filed
The January 2025 joint testimony addressed each layer of the rate-making stack:
- Marginal generation capacity cost (MGCC): SCE's estimate is artificially low because it rests on outdated resource costs — the 2023 IRP model significantly updates battery and solar costs relative to the 2022 model, net cost-of-new-entry energy revenues are overstated by fixing real energy prices at 2028 levels, and the estimate fails to adjust for effective load carrying capability (ELCC).
- Marginal energy costs, marginal distribution capacity cost methodology, and marginal customer costs — with corrections where SCE's methods departed from cost causation.
- Revenue allocation and rate design for large industrial customers, grounded in the affordability record: large energy consumers face a competitiveness crisis, and high electric rates have already driven large consumers out of the state.
Why it matters
Marginal cost inputs are where class cost allocation is quietly decided — an understated generation capacity cost, for example, shifts revenue responsibility among classes and dulls the price signals that reward industrial flexibility. Getting the inputs right is the least glamorous and most consequential work in California rate design.
Facing a related regulatory or commercial question? Harper Advisory works with a focused number of large industrial energy users across ERCOT, CAISO, PJM, and other US markets.
Contact UsThis summary is drawn from documents on the public record and is provided for general information. It is not legal advice, and it does not disclose any confidential client matter.