SCE Rates for January 1, 2026: $444 Million Reset -- Rates Down Now, System Costs Up Long-Term
SCE submitted Advice Letter 5725-E (available here) to implement its full, consolidated set of CPUC- and FERC-authorized electric revenue requirement and rate changes effective January 1, 2026.
How to read this filing: Advice Letter 5725-E implements a $444 million increase in SCE’s authorized system revenue requirement, but that figure should not be read as a one-for-one increase in January 1 customer rates. The consolidated year-end filing blends new base costs with the amortization of large prior-year balancing account over- and under-collections. In this case, refunds and timing credits (particularly in procurement and public purpose accounts) temporarily offset rising delivery, transmission, wildfire, and non-bypassable costs. Consequently, some customer classes see near-term rate declines even as the underlying cost structure continues to expand.
What SCE is Revealing
AL 5725-E shows that the largest upward rate pressure comes from delivery-side and non-energy components rather than commodity energy alone. Distribution revenue requirements increase significantly due to:
- General Rate Case-authorized capital and O&M;
- Wildfire mitigation and vegetation management costs;
- Pension and medical balancing account true-ups; and
- Updated uncollectibles.
Transmission costs will also rise following FERC-jurisdictional base transmission updates and transmission balancing account adjustments. On the procurement side, the adopted 2026 Energy Resource Recovery Account forecast increases fuel and purchased power revenue requirements, even as large ERRA and other balancing account amortizations partially offset that increase in rate levels.
The updated 2026 Cost of Capital decision (summarized here) modestly lowers SCE’s authorized rate of return and reduces the base revenue requirement compared to preliminary filings, while flowing through to capital-heavy balancing and memorandum accounts.