Electric SOS Pricing
Electric Standard Offer Service (SOS) is the electricity service provided by your local electric utility if you don't choose to buy electricity from another supplier. The electric utility buys SOS electricity from wholesale suppliers and then delivers it to you. The SOS—or “electric supply”—rate on a customer’s electric bill refers to the actual price of the electricity that the utility is supplying to the customer. Ultimately, this rate is combined with the electric utility’s distribution rate—the price charged by the utility to cover its cost to distribute the electricity supply to the customer—to form the customer’s total bill.
SOS electricity is bought through auctions that happen every few months. Several electricity suppliers bid to offer the best price. The supplier who offers the lowest price gets the contract to supply the electricity. An independent, neutral bid monitor oversees the auction process to ensure that the bids are consistent with market conditions and competitive, and that the process is open, fair, and transparent. Parties involved in the wholesale auctions, including the electric utilities, the staff of the Public Service Commission, OPC, and wholesale suppliers, also participate in an annual review of the auction process to make any necessary changes or improvements.
An electric utility meets its customer load requirement—the total electricity supply it will need to meet the consumption demand for all customers—through several electric supply contracts whose terms overlap by a number of months. Most of Maryland’s electric utilities execute 24-month contracts that cover about 25% of their total residential electricity load. The electric utilities stagger their procurement so that their demand obligations are being met by four separate contracts at any given time, each of which expires at a different time. Electric utilities procure SOS electricity in this way because it tends to reduce price instability and smooth the impact of wholesale price swings on a customer’s bill.
Each electric supply contract contains fixed prices, but those prices are typically fixed differently for winter and non-winter seasons. Because of this, and because of the way the electric utility’s supply contracts overlap to reduce the incidence of large price swings, the SOS electricity rate on your bill will change slightly each quarter. Prices can also change depending on things like energy use around the world, the supply of energy resources, and government policies.
To find more information about your electric utility’s SOS prices, please visit the links below.