diff --git a/.changeset/friendly-oranges-fold.md b/.changeset/friendly-oranges-fold.md
new file mode 100644
index 0000000000..846f1de922
--- /dev/null
+++ b/.changeset/friendly-oranges-fold.md
@@ -0,0 +1,6 @@
+---
+"electric-sql": patch
+---
+
+Use localhost instead of 127.0.0.1 as default address for Electric.
+Update documentation of command-line options for the CLI's generate command.
diff --git a/clients/typescript/src/cli/migrations/handler.ts b/clients/typescript/src/cli/migrations/handler.ts
index 8890f1f786..bca0f59f95 100644
--- a/clients/typescript/src/cli/migrations/handler.ts
+++ b/clients/typescript/src/cli/migrations/handler.ts
@@ -15,7 +15,7 @@ type GeneratorArgs = Partial<GeneratorOptions>
  *    Optional argument providing the url to connect to the PG database via the proxy.
  *    If not provided, it uses the url set in the `PG_PROXY_URL` environment variable.
  *    If that variable is not set, it resorts to the default url which is
- *    'postgresql://prisma:password@localhost:65432/electric'.
+ *    'postgresql://prisma:proxy_password@localhost:65432/electric'.
  *    NOTE: the generator introspects the PG database via the proxy,
  *          the URL must therefore connect using the "prisma" user.
  *  - `--out <path>`
diff --git a/clients/typescript/src/cli/migrations/migrate.ts b/clients/typescript/src/cli/migrations/migrate.ts
index 811765706b..c7ed1d3351 100644
--- a/clients/typescript/src/cli/migrations/migrate.ts
+++ b/clients/typescript/src/cli/migrations/migrate.ts
@@ -12,7 +12,7 @@ import { dedent } from 'ts-dedent'
 const appRoot = path.resolve() // path where the user ran `npx electric migrate`
 
 export const defaultOptions = {
-  service: process.env.ELECTRIC_URL ?? 'http://127.0.0.1:5133',
+  service: process.env.ELECTRIC_URL ?? 'http://localhost:5133',
   proxy:
     process.env.ELECTRIC_PROXY_URL ??
     'postgresql://prisma:proxy_password@localhost:65432/electric', // use "prisma" user because we will introspect the DB via the proxy
diff --git a/docs/api/generator.md b/docs/api/generator.md
index 495fbf4d59..ee1f4b92c3 100644
--- a/docs/api/generator.md
+++ b/docs/api/generator.md
@@ -22,7 +22,7 @@ Note that you can use an optional `--watch` flag to automatically re-generate th
 The generate script accepts a number of arguments:
 
 ```shell
-npx electric-sql generate [--service <url>] [--out <path>] [--watch [<pollingInterval>]]
+npx electric-sql generate [--service <url>] [--proxy <url>] [--out <path>] [--watch [<pollingInterval>]]
 ```
 
 All arguments are optional and are described below:
@@ -30,6 +30,7 @@ All arguments are optional and are described below:
 | Argument | value | description |
 |----------|-------|-------------|
 | <span className="no-wrap">`--service`</span> | `<url>` | Provides the url to connect to the Electric sync service. If not provided, it uses the url set in the `ELECTRIC_URL` environment variable. If that variable is not set, it resorts to the default url which is `http://localhost:5133`. |
+| <span className="no-wrap">`--proxy`</span> | `<url>` | Provides the url to connect to Electric's database proxy. If not provided, it uses the url set in the `PG_PROXY_URL` environment variable. If that variable is not set, it resorts to the default url which is `postgresql://prisma:proxy_password@localhost:65432/electric`. |
 | <span className="no-wrap">`--out`</span> | `<path>` | Specifies where to output the generated client. Defaults to `./src/generated/client` |
 | <span className="no-wrap">`--watch`</span> | `<pollingInterval>` | Run the generator in watch mode. Accepts an optional polling interval (in milliseconds) which defines how often to poll Electric for database migrations. The default polling interval is 1000ms. |