to use the required spell slot, you should use data "UseCosts" "SpellSlotsGroup:1:1:1" instead of hitcosts. for the upcasting part, i'm not exactly sure how you did it, but i did this and it worked for me.
new entry "SAS_Smite_Shocking_2
using "SAS_Smite_Shocking"
data "ExtraDescriptionParams" "DealDamage(2d6,Lightning)"
data "TooltipDamageList" "DealDamage(2d6,Lightning)"
data "TooltipUpcastDescriptionParams" "DealDamage(2d6,Lightning)"
data "UseCosts" "ActionPoint:1;SpellSlotsGroup:1:1:2"
data "RootSpellID" "SAS_Smite_Shocking"
data "PowerLevel" "2"
or
new entry "SAS_Smite_Shocking_2
using "SAS_Smite_Shocking"
data "SpellRoll" "Attack(AttackType.MeleeWeaponAttack)"
data "SpellSuccess" "DealDamage(MainMeleeWeapon, MainMeleeWeaponDamageType); ExecuteWeaponFunctors(MainHand); DealDamage(2d8, Lightning,Magical);ApplyStatus(MAG_ELECTROCUTED,100,3);ApplyStatus(SHOCKING_GRASP,100,3, , , ,not SavingThrow(Ability.Charisma, SourceSpellDC()))"
data "TooltipUpcastDescriptionParams" "DealDamage(2d8,Lightning)"
data "UseCosts" "ActionPoint:1;SpellSlotsGroup:1:1:2"
data "RootSpellID" "SAS_Smite_Shocking"
data "PowerLevel" "2"