If you want to understand where an industrial electricity bill in California comes from, understand the General Rate Case (GRC). Every three to four years, each large investor-owned utility files one, and the two phases of that case determine most of what customers will pay until the next one. The easiest way to think about it: Phase 1 decides how big the pie is. Phase 2 decides how the pie gets sliced.
Phase 1 — sizing the pie
In Phase 1, the utility asks the CPUC to authorize its revenue requirement: the total amount it may collect from all customers to cover operations, maintenance, administrative costs, and a return on its capital investments. The utility's application is the opening bid — capital plans, staffing levels, program budgets, depreciation schedules. Intervenors like CLECA then test every layer of that ask through discovery, testimony, and briefing: Is the capital plan justified? Are administrative and general costs benchmarked against anything? Does spending earn a cost-benefit ratio above one?
The difference matters enormously. In Southern California Edison's Test Year 2025 GRC (A.23-05-010), CLECA joined ratepayer parties in scrutinizing the proposed revenue requirement — because every dollar authorized in Phase 1 becomes a dollar that must be collected from someone in Phase 2.
Phase 2 — slicing the pie
Phase 2 answers two questions. Cost allocation: what share of the authorized revenue requirement does each customer class — residential, commercial, industrial, agricultural — pay? Rate design: within each class, how is that share collected — through energy charges, demand charges, fixed charges, and time-of-use periods?
CLECA's Phase 2 position has been consistent for decades: slices should follow cost causation. High load factor, high voltage industrial customers impose less cost per kilowatt-hour on the system — they take power at transmission voltage, use it around the clock, and require little of the distribution system that drives most cost growth. Cost allocation grounded in long-run marginal cost gives each class the slice its actual usage causes. Allocation methods that spread costs on an equal-cents-per-kilowatt-hour basis ignore causation — and quietly shift costs onto the industrial customers least responsible for them.
Why it matters now
With California industrial rates roughly triple those of neighboring states, both halves of the pie problem are live: revenue requirements are growing at a record pace, and allocation fights determine how much of that growth lands on manufacturing. CLECA intervenes in both phases of every major PG&E and SCE rate case — see our cost allocation positions and CLECA's testimony in the SCE TY2025 GRC.