For millions of homeowners across Southern California, the monthly electricity bill has evolved from a routine utility expense into a significant financial concern. As 2025 approaches, Southern California Edison (SCE) customers stand on the precipice of the most substantial series of changes to electricity pricing and billing structures in over a decade. This report serves as a comprehensive guide for homeowners, aiming to demystify the complex web of regulatory decisions, rate hikes, and billing reforms that will redefine the cost of keeping the lights on in 2025 and beyond.
The narrative of 2025 is not merely one of rising costs, although that is a central theme. It is also a story of structural transformation. The way usage is measured, the way bills are calculated, and the economic logic behind installing solar panels are all undergoing fundamental shifts. Two distinct but overlapping events will dominate the landscape in late 2025: a traditional rate increase driven by the General Rate Case (GRC) in October, and a structural billing reform known as the "Base Services Charge" in November.
Understanding these changes requires looking beyond the bottom-line dollar figure. It necessitates an examination of the forces driving these costs—ranging from catastrophic wildfire mitigation to the modernization of an aging grid. Furthermore, for the hundreds of thousands of homeowners considering or currently using solar power, the rules of the game have changed. The transition from Net Energy Metering (NEM) 2.0 to the Net Billing Tariff (NEM 3.0) has altered the financial calculus of home energy generation, making battery storage not just a luxury, but a central component of economic viability.
This report analyzes these developments with a focus on clarity and practical impact. By dissecting the regulatory filings, rate schedules, and industry trends, it provides a roadmap for homeowners to navigate this volatile environment. From the specifics of the October rate hike to the nuances of Time-of-Use (TOU) plans, the following sections offer a deep dive into the mechanics of the modern electric bill.
---
2. The October 2025 Rate Adjustment
The fourth quarter of 2025 marks the arrival of a significant rate adjustment for SCE residential customers. This increase is the result of the California Public Utilities Commission (CPUC) finalizing its decision on SCE's 2025 General Rate Case, a process that determines the revenue the utility is allowed to collect to cover its operating expenses and capital investments.
2.1 The Bottom Line for Residential Bills
Effective October 1, 2025, the average rate for residential electricity is projected to rise to approximately 35.3 cents per kilowatt-hour (kWh).1 To put this in perspective, this figure represents a noticeable jump from the previous average rate of 31.2 cents per kWh. When the California Climate Credit—a semi-annual distribution from the state's cap-and-trade program—is factored in, the effective rate moves from 29.2 cents to 33.3 cents per kWh.1
For the typical household, these cents-per-kWh figures translate into tangible monthly cost increases. The average residential customer, defined by SCE as a home using 500 kWh per month, will see their monthly bill increase from roughly $171.17 to $193.23.1 This constitutes a monthly increase of $22.06, or a 12.9% rise in total energy costs.1
It is crucial to note that this 12.9% increase is an average. Households with higher energy consumption—such as those with pool pumps, electric vehicles (EVs), or older air conditioning units in inland valleys—will experience a larger absolute dollar increase. Conversely, smaller households or those with significant energy efficiency measures may see a smaller impact, though the percentage increase remains consistent across the residential class.
2.2 Impact on Income-Qualified Programs
The rate increase also affects customers enrolled in the California Alternate Rates for Energy (CARE) program, which provides discounted rates to low-income households. Despite the protections offered by the program, CARE customers are not immune to the rising revenue requirements.
The average CARE customer bill is projected to rise from $107.99 to $122.31 per month.1 This represents an increase of $14.32, or approximately 13.3%.1 While the CARE discount continues to shield these households from the full brunt of standard rates, the double-digit percentage increase highlights the broad nature of this rate adjustment.
2.3 Deconstructing the Rate Hike
The 12.9% increase is not driven by a single factor. Instead, it is the net result of several moving parts within the utility's pricing structure. Understanding these components helps clarify why bills are rising despite potential decreases in specific areas like fuel costs.
2.3.1 The General Rate Case (GRC) Increase
The primary driver is the 2025 General Rate Case. The CPUC's decision in September 2025 authorized SCE to collect an additional $1.685 billion in revenue.1 This funding is designated for the utility's core functions: maintaining the distribution grid, paying employee salaries, and funding capital projects aimed at safety and reliability.1
2.3.2 Wildfire Mitigation and Restoration Costs
A significant portion of the increase—$536 million—is allocated to recover costs already incurred between 2020 and 2023.1 These costs are associated with two main activities:
- Risk Reduction: Projects designed to prevent utility equipment from igniting wildfires.
- Restoration: Expenses related to repairing the grid after catastrophic events like storms and fires.1
Because these costs were "fronted" by the utility to ensure immediate safety and power restoration, they are now being recovered from ratepayers.
2.3.3 The Generation Refund Expiration
Another factor contributing to the bill increase is the removal of a temporary refund. In 2024, customers received a refund totaling $751 million because the actual cost of natural gas and power was lower than what had been forecasted.1 This refund acted as a temporary suppressor of rates. Its expiration in October 2025 effectively raises the bill, as the credit disappears from the ledger.
2.3.4 Offsetting Decreases
Partially offsetting these increases is a reduction in delivery rates. SCE is removing $665 million of costs that have been fully recovered from customers.1 While this decrease helps soften the blow, it is insufficient to counteract the larger increases from the GRC and wildfire spending, resulting in the net 12.9% hike.
2.4 The Historical Context of Rate Inflation
To fully appreciate the 2025 increase, it must be viewed within the context of the last decade. Electricity rates in California have been on a steady upward trajectory. In 2015, the average electricity rate was approximately 12.65 cents per kWh.3 By 2025, that rate will have nearly tripled to roughly 35.3 cents per kWh.1
| Year | Average Rate (cents/kWh) | YoY Change (%) |
|---|---|---|
| 2015 | 12.65 | - |
| 2020 | 13.15 | +1.1% |
| 2022 | 15.04 | +10.1% |
| 2023 | 16.00 | +6.4% |
| 2024 | 16.48 | +3.0% |
| 2025 | 17.47 (Forecast) / 35.3 (Actual) | +12.9% |
Note: The historical table from source 3 shows a lower baseline (17.47 cents for 2025), likely referring to generation rates or a specific sub-component, whereas the official SCE advisory 1 cites the total bundled residential rate at 35.3 cents. The discrepancy highlights the complexity of bill components, but the trend line of aggressive increases remains consistent.
This long-term trend, characterized by an 83% increase over a decade, underscores that the 2025 hike is part of a structural shift in the cost of energy in California.4 The drivers—climate change adaptation, grid hardening, and decarbonization—are persistent forces that are unlikely to dissipate in the near future.
---
3. The "Why": Behind the Rising Costs
Homeowners often ask a simple question: "Why does the price of electricity keep going up?" The answer lies in the physical reality of the California grid and the changing climate it operates within. The costs passed down to ratepayers in 2025 are largely funded projects aimed at preventing disasters and modernizing infrastructure.
3.1 The War on Wildfires
The single largest driver of capital spending for California utilities is wildfire mitigation. Following a series of devastating fires linked to utility equipment, the state has mandated rigorous safety upgrades. The 2025 GRC decision authorized billions of dollars specifically for "grid hardening"—the process of making power lines resistant to wind, heat, and vegetation.5
3.1.1 Targeted Undergrounding
The most effective, but most expensive, method of preventing fires is to bury power lines underground. The CPUC authorized $941 million for SCE to underground approximately 177 miles of power lines in high fire-threat districts.2 While SCE requested funding for significantly more mileage (580 miles), the regulator limited the scope to balance safety with affordability.2 Undergrounding eliminates the risk of lines sparking fires during high winds but costs millions of dollars per mile—a cost borne by all ratepayers.
3.1.2 Covered Conductors
A more cost-effective alternative to undergrounding is the installation of "covered conductors." These are overhead wires wrapped in protective insulation layers. If a tree branch falls on a covered conductor, the insulation prevents an electrical arc that could start a fire. The CPUC authorized $1.272 billion for the installation of 1,653 miles of covered conductor.2 This technology allows the utility to harden a larger portion of the grid more quickly and cheaply than undergrounding.
3.2 Vegetation Management
Beyond hardware, the utility must maintain the environment around its lines. The GRC decision allocated over $553 million for vegetation management.5 This involves inspecting millions of trees and trimming or removing those that pose a threat to power lines. This is an operational expense that recurs every year, acting as a permanent floor on rates in fire-prone regions.
3.3 Modernizing for an Electric Future
The grid was originally designed to deliver power one way: from massive power plants to homes. Today, the grid must handle bidirectional flow—taking solar power from homes during the day and delivering power to EVs at night. The 2025 budget includes substantial funding for "Load Growth and Grid Modernization".5 This includes upgrading transformers, substations, and software systems to manage the complex flows of a decarbonized energy system. As more homeowners buy EVs and install heat pumps, the local grid requires reinforcement to prevent overloads, further driving up the revenue requirement.
---
4. The Structural Shift: The Base Services Charge (November 2025)
While the October rate hike is a change in price, the November 2025 update is a change in structure. Mandated by Assembly Bill 205 (AB 205), this reform introduces a fixed monthly fee known as the Base Services Charge.6 This represents one of the most fundamental shifts in residential billing in California's history.
4.1 How It Works
Traditionally, almost all costs of running the grid were baked into the price per kilowatt-hour. This meant that if a household used zero electricity, they paid almost nothing toward the maintenance of the poles and wires connected to their house.
Under the new system, costs are unbundled.
- Fixed Costs: The cost of maintaining the infrastructure (meters, poles, customer service) is recovered through a flat monthly fee.
- Variable Costs: The cost of the actual electricity (generation and transmission) remains a volumetric rate ($/kWh).
Starting in November 2025, residential bills will include a separate line item for the Base Services Charge. Crucially, the introduction of this charge is paired with a reduction in the volumetric rate.6
4.2 The Fee Structure
The amount a homeowner pays for the Base Services Charge depends on their enrollment in income-qualified programs.
| Customer Group | Monthly Fixed Charge | Daily Equivalent |
|---|---|---|
| Standard Residential (Non-CARE/FERA) | ~$24.15 | ~$0.79 |
| FERA / Affordable Housing | ~$12.00 | ~$0.40 |
| CARE Customers | ~$6.00 | ~$0.20 |
Data Source: 8
For the vast majority of homeowners who are not income-qualified, the new bill will start with a $24.15 charge before a single kilowatt-hour of electricity is used.
4.3 The Trade-Off: Lower Usage Rates
To ensure utilities do not simply pocket the extra money, the CPUC mandated that the revenue from the fixed charge must be used to lower the price per kWh. SCE estimates that the volumetric rate will decrease by approximately 10% relative to what it would have been without the fixed charge.8
This creates a pivot point where some customers save money and others pay more.
- Low-Energy Users: A customer living in a small apartment or a highly efficient home using very little power will likely see their total bill increase. The savings from a 10% lower rate on a small amount of energy will not be enough to offset the new $24.15 fixed fee.8
- High-Energy Users: A family in a larger home, or one with an EV and air conditioning, will likely see their total bill decrease or stay flat. Because they use a lot of power, a 10% reduction in the rate adds up to significant savings, which can exceed the cost of the $24.15 fee.8
This structure is intentionally designed to encourage electrification. By lowering the penalty for using more electricity (the high $/kWh rate), the state hopes to make it more affordable to charge electric cars and run electric heat pumps compared to using gasoline or natural gas.6
---
5. Solar Power in the New Era: Navigating NEM 3.0
For homeowners looking to escape rising rates, rooftop solar has long been the primary solution. However, the solar landscape has shifted dramatically with the implementation of the Net Billing Tariff, commonly known as NEM 3.0. For those considering solar in 2025, the economics are fundamentally different than they were just a few years ago.
5.1 The Decline of Export Value
Under the previous rule (NEM 2.0), homeowners could treat the grid like a free battery. Every kWh of excess solar energy sent to the grid earned a 1-for-1 credit, which could be used to offset energy consumed at night.
NEM 3.0 ended this arrangement for new applicants (post-April 2023). Now, the value of solar energy sent to the grid is determined by the "Avoided Cost Calculator."
- The Drop: The average compensation for exported solar energy has fallen by approximately 75%.9 Instead of getting ~30 cents per kWh, a homeowner might receive only 5 to 8 cents.10
- Timing is Everything: The export rate is not flat; it varies by hour. Exporting energy at noon is nearly worthless because the grid is already flooded with solar. Exporting energy in the evening (if possible) is worth more, but solar panels generally don't produce power then.11
5.2 The Battery Revolution
Because the grid no longer pays well for excess solar, the financial strategy has shifted from "exporting" to "self-consumption." This makes battery storage (like the Tesla Powerwall or Enphase battery) essential for new solar installations.
- Solar-Only Systems: Without a battery, a solar system in 2025 has a much longer payback period—estimated at 8-10 years.12 The homeowner saves money during the day but still pays full price for electricity at night.
- Solar + Battery Systems: Adding a battery allows the homeowner to store the cheap energy produced at noon and use it to power their home in the evening. This avoids buying power from SCE during the expensive peak hours (4 PM – 9 PM).
- ROI Impact: Systems with batteries can achieve payback periods of 7-8 years, often faster than solar-only systems under the new rules.12
- Attachment Rates: The market reflects this shift. Before NEM 3.0, only about 11% of solar installations included a battery. By 2024, that number had surged to over 50%.9
5.3 Is Solar Still Worth It?
Despite the reduction in export credits, solar remains a strong investment in 2025 for one simple reason: SCE rates are high and rising.
- Avoided Cost: Every kWh a solar panel produces and the home consumes is a kWh the homeowner doesn't buy from SCE at 35 cents (or more). As utility rates rise, the value of that "avoided cost" increases.9
- Inflation Hedge: Investing in a solar-plus-battery system locks in a fixed cost of energy for 25 years. With utility rates historically rising at over 6% per year 3, avoiding that inflation yields tens of thousands of dollars in lifetime savings.
- Federal Incentives: The 30% Federal Investment Tax Credit (ITC) remains available through 2032, significantly reducing the upfront cost of the system.9
---
6. Rate Plan Analysis: Choosing the Right Strategy
With or without solar, choosing the correct rate plan is one of the most effective ways for a homeowner to manage costs. SCE offers several Time-of-Use (TOU) plans, and the optimal choice depends heavily on a household's lifestyle and energy habits.
6.1 Understanding Time-of-Use (TOU)
TOU plans charge different rates depending on the time of day. The goal is to discourage energy use during the "peak" window when demand on the grid is highest.
- Peak Hours: Usually 4:00 PM to 9:00 PM. Rates are highest.
- Off-Peak: Before 4:00 PM and after 9:00 PM. Rates are lower.
- Super Off-Peak: Often 8:00 AM to 4:00 PM in winter. Rates are lowest.
6.2 The Main Contenders
Homeowners generally choose between three primary plans.
6.2.1 TOU-D-4-9PM
- Structure: Peak rates apply from 4 PM to 9 PM on weekdays.
- Pros: The peak window is predictable. It offers a moderate balance between peak and off-peak prices.
- Cons: The 4-9 PM window coincides with when families come home, cook dinner, and watch TV, making it hard to avoid peak charges.13
- Best For: The average household that can delay running the dishwasher or laundry until after 9 PM.
6.2.2 TOU-D-5-8PM
- Structure: Peak rates apply from 5 PM to 8 PM.
- Pros: The peak window is shorter (3 hours vs. 5 hours).
- Cons: The price during that 3-hour window is significantly higher—often exceeding 60 cents per kWh in the summer.13 Using energy during this time is punitively expensive.
- Best For: Households that are disciplined enough to shut down almost all energy use during dinner time, or those with batteries programmed to discharge during this short window.
6.2.3 TOU-D-PRIME
- Structure: Designed specifically for households with "electrified" technologies—EVs, heat pumps, or home batteries.
- Pros: Offers the lowest off-peak rates, making it cheap to charge a car overnight.
- Cons: Traditionally carried a higher daily fixed charge (approx $12/month) compared to other plans. However, with the structural shift to the standardized Base Services Charge in November 2025, this difference may be neutralized, making PRIME potentially more attractive for high users.13
- Best For: High-consumption homes with EVs or heat pumps.
6.3 The "Tiered" Alternative
Some customers remain on the legacy "Tiered" rate plan.
- Structure: You pay a lower rate (Tier 1) for a baseline amount of energy. If you exceed that amount, the rate jumps to Tier 2 (roughly 30% higher).14 Time of day does not matter.
- Pros: Simplicity. You don't have to worry about when you use energy.
- Cons: Tier 2 rates can be very high (over 42 cents/kWh).
- Status: Generally, high-usage households pay more on Tiered plans than TOU plans, but low-usage households (who stay in Tier 1) might find it competitive.
---
7. Future Outlook: What to Expect in 2026 and Beyond
The 2025 rate increase is not a one-time event; it is part of a multi-year trajectory established by the GRC. Homeowners should anticipate continued cost pressures through the remainder of the decade.
7.1 The Four-Year Cycle
The 2025 GRC decision authorized revenue increases for four years: 2025, 2026, 2027, and 2028.
- 2025: +12.6% (Revenue Requirement)15
- 2026: +5.6%
- 2027: +5.1%
- 2028: +4.2%
While the percentage increases for 2026-2028 are smaller than the 2025 jump, they are cumulative. A 5% increase on top of the already elevated 2025 rates means that residential rates could approach 37-38 cents per kWh by 2027.
7.2 The 2026 Forecast
Looking specifically at 2026, there is a mix of good and bad news.
- The Good News: SCE's fuel and power procurement costs are forecasted to decrease slightly (by about $75 million) in 2026 due to stabilizing natural gas markets.16 This could lower the generation portion of the bill by a fraction of a cent.
- The Bad News: The delivery portion of the bill (grid maintenance, wildfire work) will continue to rise based on the GRC schedule.
- Net Impact: Current projections suggest a net bill increase of approximately 2.6% for residential customers in January 2026.17 While modest compared to the 2025 hike, it continues the upward trend.
7.3 Long-Term Pressures
Several external factors ensure that rates will likely remain high:
- Inflation: The cost of materials (transformers, wire, steel) and labor continues to rise.
- Insurance: The cost of wildfire liability insurance for utilities has skyrocketed. These premiums are passed through to customers.17
- Electrification Load: As the state pushes for 100% EV sales by 2035, SCE must invest heavily in upgrading the grid to handle the charging load. These infrastructure upgrades are capital-intensive and will be reflected in future rate cases.
---
8. Action Plan: How Homeowners Can fight Back
Faced with a 12.9% rate hike and a new fixed charge, homeowners are not helpless. Active management of energy use is the most effective way to mitigate these costs.
8.1 Immediate Efficiency Audits
The cheapest electricity is the electricity you don't use.
- Smart Thermostats: Devices like Nest or Ecobee can automatically pre-cool the home before peak rates kick in at 4 PM, allowing the AC to run less when power is most expensive.
- LED Upgrades: Ensuring 100% of lighting is LED reduces baseline load.
- Vampire Loads: Unplugging old electronics or extra refrigerators in the garage can save significant amounts on the new, higher rates.
8.2 Strategic Load Shifting
Adapting to the TOU windows is critical.
- Laundry and Dishes: Run these appliances in the morning or after 9 PM.
- EV Charging: Ensure the car is programmed to charge only after midnight.
- Pool Pumps: These are massive energy users. Verify the pump timer is set to run strictly during off-peak morning hours.
8.3 The Solar/Battery Decision
For those on the fence about solar, 2025 is a critical year.
- Lock in Incentives: The 30% federal tax credit is stable now but faces political uncertainty in the future.
- Design for Self-Consumption: When getting quotes, prioritize systems with batteries. Ask the installer to demonstrate the "offset" assuming zero exports.
- Consider the "Fixed Charge" Math: Remember that the new $24 fixed charge will eat into monthly savings. Ensure the financial model provided by the solar installer accounts for this new fixed cost to get an accurate payback period estimate.
8.4 Income-Qualified Enrollment
If a household's income has changed, checking eligibility for CARE or FERA is essential.
- CARE: Offers a ~30% discount and reduces the new fixed charge to just $6.
- FERA: Offers an 18% discount and reduces the fixed charge to $12.
These programs are the single most effective shield against rate hikes for qualifying families.
Conclusion
The 2025 changes to SCE rates represent a turning point for Southern California homeowners. The era of low-cost, set-it-and-forget-it energy is effectively over. The convergence of the October rate hike and the November fixed charge creates a complex environment where bills are higher, but the incentives to electrify are stronger.
While the costs are daunting, understanding the mechanics of the "Base Services Charge" and the nuances of NEM 3.0 provides a distinct advantage. Homeowners who actively manage their usage, optimize their rate plans, and invest in efficiency or storage technologies will be best positioned to weather the rising tide of energy costs. The grid is modernizing, and the homeowner's approach to energy must modernize with it.
Works cited
1. SCE Rate Advisory, accessed December 6, 2025, https://www.sce.com/save-money/rates-financing/sce-rate-advisory
2. CPUC Decision Fact Sheet Southern California Edison's 2025 General Rate Case, accessed December 6, 2025, https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/general-rate-cases/sce/fact-sheet-sce-grc-091825.pdf
3. Choose Solar Now: Combat Rising SCE Rate Hike 2025 in SoCal, accessed December 6, 2025, https://optiononesolar.com/blog/choose-solar-now-combat-rising-sce-rate-hike-2025-in-socal
4. California Electric Rates Are Surging. Here's What You Need to Know - Baker Home Energy, accessed December 6, 2025, https://bakerhomeenergy.com/kc/ca-electric-rate-increases-october-2025/
5. CPUC Decision in Edison Rate Case Prioritizes Affordability Safety ..., accessed December 6, 2025, https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-decision-in-edison-rate-case-prioritizes-affordability-safety-and-reliability
6. Base Service Charge | SCE, accessed December 6, 2025, https://www.sce.com/save-money/rates-financing/residential-rate-plans/bsc
7. Understanding Rate Updates to Your Electricity Bill | SCE, accessed December 6, 2025, https://www.sce.com/save-money/rates-financing/residential-rate-plans/understanding-updates-to-your-bill
8. YOUR ELECTRIC BILL IS CHANGING - SCE, accessed December 6, 2025, https://www.sce.com/sites/default/files/custom-files/PDF_Files/BSC_Fact_Sheet_R5_June_2025.pdf
9. Is Solar Worth It In California In 2025? Complete Homeowner's Guide - SolarTech, accessed December 6, 2025, https://solartechonline.com/blog/is-solar-worth-it-california-2025/
10. NEM 3.0 in California: What You Need to Know - EnergySage, accessed December 6, 2025, https://www.energysage.com/blog/net-metering-3-0/
11. Explaining and modeling California's Net Billing Tariff (NEM 3.0) | Aurora Solar, accessed December 6, 2025, https://aurorasolar.com/blog/explaining-and-modeling-californias-net-billing-tariff-nem-3-0/
12. What Is NEM 3.0? Complete Guide To California's New Solar Policy (2025) - SolarTech, accessed December 6, 2025, https://solartechonline.com/blog/what-is-nem-3-0-california-solar-guide/
13. Time-of-Use Residential Rate Plans - SCE, accessed December 6, 2025, https://www.sce.com/save-money/rates-financing/residential-rate-plans/time-of-use-plans
14. 2025 SCE Time-Of-Use (TOU) Rates: A Beginner's Guide | Solar.com, accessed December 6, 2025, https://www.solar.com/learn/sce-time-of-use-tou-rates-a-beginners-guide/
15. Impending SoCal Edison Rate Changes: What Customers Need to Know - SPURR, accessed December 6, 2025, https://spurr.org/2025/10/07/impending-socal-edison-rate-changes-what-customers-need-to-know/
16. SCE 2026 ERRA Forecast, accessed December 6, 2025, https://www.sce.com/sites/default/files/Regulatory/DocumentLibrary/Notices/Customer%20Notice%20-%20SCE%202026%20ERRA%20Forecast.pdf
17. FRIDAY AGGREGATE: SCE Rates; Demand Response; Self-Generation Incentive Program, accessed December 6, 2025, https://www.calregulatory.com/friday-aggregate-sce-rates-demand-response-self-generation-incentive-program/
