Southern California Edison (SCE): Mastering 2026 Commercial Time-of-Use Rates
Operating a large commercial or industrial facility in the Los Angeles basin or Orange County requires navigating the most complex tariff structures in North America. Southern California Edison (SCE) has systematically weaponized its Time-of-Use (TOU) and Demand schedules, particularly the TOU-8 suite, to enforce grid discipline as the state battles the Duck Curve. In 2026, energy consumed between the critical 4:00 PM and 9:00 PM summer window carries punishing multipliers, making passive energy management a severe financial liability.
Executive Impact
- →The 4 PM Trap: The shift of the "On-Peak" window directly to the late afternoon and evening guarantees that commercial solar arrays will be contributing virtually nothing during the most expensive hours of the grid cycle.
- →Coincident vs. Non-Coincident Demand: SCE bills for your facility\'s highest 15-minute peak *anytime* during the month (Non-Coincident/Facilities Related Demand), AND stacks an additional massive penalty for your peak drawn specifically during the On-Peak window (Time-Related Demand).
- →Mandatory Load Shifting: Survival requires decoupling operational hours from utility peak hours via Battery Storage, thermal pre-cooling, or aggressive 2nd and 3rd shift manufacturing models.
Deconstructing TOU-8 Demand Charges
The TOU-8 tariff covers SCE customers with demand exceeding 500 kW. It fundamentally separates costs into two agonizing categories:
1. Volumetric Energy (kWh)
This is the raw cost of the electrons. Under TOU design, the actual energy cost during "Super Off-Peak" (e.g., 8:00 AM to 4:00 PM in Winter/Spring) can plunge below a few cents. However, hit that 4:00 PM Summer switch, and the volumetric cost rockets up.
2. The Dual-Demand Penalty (kW)
Demand charges make up 40% to 60% of an SCE commercial bill.
- Facilities Related Demand (FRD): You pay a set price per kW for the single highest 15-minute usage spike your facility creates *at any point* in the billing cycle. This pays for the local transformers and wires required to service your specific extreme capability.
- Time Related Demand (TRD): An *additional* and typically much higher charge applied to your peak draw exactly within the 4 PM to 9 PM window. This pays for the statewide peaking power plants that must ignite to fuel the California Duck Curve.
If a massive chiller array kicks on at 4:15 PM on a Tuesday in July, the facility is hit by *both* multipliers simultaneously, effectively ruining the utility budget for the entire month.
Mitigation: The "Battery First" Pivot
Historically, Southern California warehouses plastered millions of square feet of rooftop solar to offset costs. With the transition of the peak window from the afternoon to the evening, standard solar no longer hits the target—it produces the most when the grid prices are cheapest, and produces zero when the TRD penalties are applied.
To survive SCE's 2026 rate case, industrial properties are pivoting to a BESS (Battery Energy Storage System) first strategy.
By deploying 500 kW / 1 MWh commercial batteries, governed by AI-driven predictive dispatch software, a facility can literally spoof the utility meter. The software observes the facility approach an artificial threshold just before 4:00 PM. As the 4:00 PM TRD window opens, the battery discharges, instantly lowering the apparent grid demand. The facility operates normally, but SCE only "sees" a flat, optimized load profile, bypassing tens of thousands of dollars in monthly penalties.