Electric SOS Pricing
If you don’t choose another company to buy your electricity, your local electric utility will provide it through a service called Standard Offer Service, or SOS. This means the utility buys electricity from wholesale suppliers and then delivers it to your home.
The SOS rate on your electric bill is the price you pay for the electricity itself, the actual power you use. But your bill also includes a distribution charge, which covers the utility’s cost of delivering electricity to your home through their wires. Together, these make up your total electric bill.
The utility buys SOS electricity through auctions that happen every few months. In these auctions, electricity suppliers submit bids to offer the lowest price. The supplier with the lowest bid wins the contract to provide electricity. To keep the process fair and open, an independent group watches the auctions and makes sure everything follows market rules and is competitive. The Public Service Commission staff, utilities, and other interested parties review the auction each year to suggest any needed improvements.
To make sure there is always enough electricity available, utilities buy power through several contracts at the same time. Most utilities in Maryland use 24-month contracts that cover about 25% of their residential electricity needs. These contracts overlap, so at any time, the utility is covered by about four contracts, each ending at different times. This helps avoid big price swings and keeps your electric bill more stable.
Each contract sets fixed prices for the electricity, but prices usually change between winter and non-winter seasons. Because of the overlapping contracts and seasonal price differences, the SOS electricity rate you see on your bill will change slightly every few months.
The prices you pay can also be affected by bigger factors, like how much energy people use worldwide, the availability of energy resources, and government policies.
If you want to learn more about the current SOS prices for your local utility, you can use the links below where you can find updated information.