CPUC Advances SCE Rate Design Settlements as V2G Rejection Draws Industry Pushback
On April 9, parties filed comments on a proposed decision in SCE's 2024 General Rate Case Phase 2.
- Recall that the PD approves nine of 10 settlement agreements resolving SCE's 2024 General Rate Case Phase 2 on marginal costs, revenue allocation, and rate design. The PD denies a Vehicle-to-Grid Rate Proposal Settlement Agreement and declines to adopt three contested proposals (deferring PRIME Plus and baseline allowance expansion to future rulemakings, and finding the Solar Energy Industry Association's transmission marginal cost proposal outside the proceeding's scope).
- The PD adopts a comprehensive settlement on marginal cost methodology and revenue allocation, agreed to by utilities, consumer advocates, and large customer groups. It sets key cost inputs (a $132.72/kW-year generation capacity marginal cost, Avoided Cost Calculator-based energy costs, and Real Economic Carrying Charge-based customer costs) and uses these to allocate SCE's revenue requirement across customer classes.
- The settlement applies a revenue-neutral allocation framework built on an illustrative $17.5 billion consolidated revenue requirement (approximately $17,466 million as of October 2024), with rates ultimately updated to actual authorized revenues at implementation. To limit bill volatility, the PD introduces "collars" that constrain how far class revenues can move from current levels: +4.0%/−6.0% for delivery revenues around the System Average Percentage Change, and +0.97%/−1.9% for generation revenues for bundled service customers.
Additional details on the proposed decision are available here.
MC
Below is a roundup of parties' comments. If additional comments surface, we will update accordingly.
Overview of Parties' Comments
Parties differ on one issue. Everything else settled.
The PD approves a stack of negotiated agreements on marginal costs, revenue allocation, and rate design. The California Farm Bureau Federation signed three of them and wants adoption without changes. CALSTART signed the EV Rate Design Settlement and supports it, with one clerical request: the PD omitted CALSTART from the settling party list. They ask the CPUC to fix the record and adopt the agreement.
CALSTART's substantive point is about timing risk. Energy-only rates for medium- and heavy-duty fleet customers extend through 2030 under the settlement. The concern is what happens after. Demand charge phase-ins not tied to actual utilization could kill projects being financed today. Energization delays are common. Early-stage load factors are low. The adopted load-factor-based on-ramp ties rate treatment to actual usage rather than a calendar deadline, which is the right design.
The live dispute is Vehicle to Grid (V2G). The PD rejected the Vehicle-to-Grid Rate Proposal settlement. SCE's V2G arguments were filed jointly with CALSTART, the Small Business Utility Advocates, the Solar Energy Industries Association, and the Vehicle-Grid Integration Council, a broad coalition pushing for reversal.
Their argument runs on two tracks. (1) The legal track: the PD evaluated the export pricing mechanism in isolation rather than the settlement as a whole, which is the wrong standard. (2) The policy track: rejecting V2G export pathways tells manufacturers and customers that California doesn't want bidirectional charging connected to the grid.
That message lands now, during a three-to-five-year product development cycle. The result is EVs optimized for behind-the-meter use (vehicle-to-home, backup power, time-of-use arbitrage) not grid resources. Approximately 18.5 GW of battery capacity gets routed around the grid.
SCE's specific defense of Avoided Cost Calculator-based export pricing is grounded in a 2022 decision (D.22-12-056), where the Commission already adopted the calculator for Net Billing Tariff exports at far greater scale. The PD's demand for additional studies before applying the same tool to V2G is, in SCE's framing, an evidentiary bar invented for this proceeding with no basis in prior CPUC standards.
The practical problem is timing. The only existing export pathways for bidirectional charging in SCE territory (the Emergency Load Reduction Program and the Demand Side Grid Support Program) expire by 2027. The Vehicle-to-Grid Rate Proposal was designed to replace them. Dynamic rates are not ready: no residential customers have enrolled in PG&E's dynamic export pilots despite direct equipment incentives. If the Vehicle-to-Grid Rate Proposal goes to further study, there is no bridge program.
INSTANT ANALYSIS
The CPUC's instinct is to slow-walk V2G until the evidence base is cleaner. The industry's counter is that slow-walking is itself a policy outcome, one that redirects capital, shapes product design, and forecloses grid integration during the window where it could still be built in. The issue is not resolved. If the Commission doesn't revisit V2G quickly, it comes back in the next proceeding with a longer delay and a harder argument to answer.