District of Columbia SOS
DC – SOS Bids & Rates Talking Points, FAQs
May 2007
Overview:
D.C. law requires Pepco to use a competitive bidding process to buy electricity for customers who do not choose an alternative electricity supplier. Customers are charged for this service—called Standard Offer Service (SOS)—under rates approved by the D.C. Public Service Commission. Because the new electricity supply contracts replaced lower-priced contracts from a few years ago, the residential SOS customers will see an increase in their electricity bills. It is estimated that the average residential customer will see an increase of 11.6 percent.
Key Messages:
• For most residential customers, the new supply rates will increase the total annual bill by less than 12 percent. For a typical residential customer that uses about 750 kWh of electricity a month, this will result in an increase of about $8.91, from approximately $77.61 to $86.52, on the total bill.
• Small Commercial customers' generation rates are going up also. The average small commercial customer's monthly bill will increase by 9.7% starting June 1, 2007.
• The rate change for larger commercial and industrial customers is also rising. All rates are available on our web site at www.pepco.com in the tariff section.
• Pepco does not generate electricity. It delivers the power but does not produce it. The power delivery company purchases the electricity it needs for its customers from unregulated wholesale suppliers, who own power plants and produce electricity or who buy and sell it on the wholesale market. This year's competitive bid process attracted bids from seven suppliers, five of whom won a piece of the SOS load.
Frequently Asked Questions:
• Fuel prices have dropped a fair amount since last year. Yet, my electric rate is going up. Why is that?
While fuel prices have dropped compared to what they were last year, they are still much higher than they were a few years back. Unfortunately, this year's supply auction replaced some older, lower-priced supply contracts, resulting in higher prices for customers.• You've been buying power competitively in D.C. for three years now, and each time it's been an increase for the residential customer. When will these increases end?
Unfortunately, the energy markets continue to be extremely volatile, meaning prices are quick to fluctuate either up or down depending on world events, weather and other factors. And, since 2004 [our first RFP was in 2004 for delivery beginning Feb. 2005] when we began purchasing electricity in the wholesale market for D.C. customers, prices have been moving upward more often than downward.• What is Standard Offer Service?
Pepco customers who do not choose an electric supplier will receive Standard Offer Service (SOS), meaning electricity is both purchased for you and delivered to you by Pepco. The SOS rates are reset once a year on June 1 and are determined through a competitive bid process in which Pepco purchases electricity for its customers. The D.C. Public Service Commission has approved the use of laddered three-year contracts to provide supply for residential customers. Each year about 33 percent of the total residential supply is put out for bid.• What power plant is my electricity coming from?
It's hard to say. This year's competitive bid process attracted bids from seven suppliers, five of whom won a piece of the SOS load. The suppliers buy and trade the energy so tracking its origin is difficult. The bid process simply ensures that we'll get the electricity supply we need to deliver the electricity to our customers at the best possible rates.• Are my delivery rates going up as well?
Not at this time. However, Pepco does have a request pending with the D.C. PSC to increase delivery rates. If approved, the change would increase the monthly residential bill by about $5.97 for the typical customer using 750 kilowatt hours of electricity a month.
• When will I know if my delivery rate is increasing?
We are expecting a decision from the D.C. PSC around mid-September. The new rate would take effect around the same time.• How do I choose a supplier other than Pepco?
First, you need to find out if there is an alternative retail electric supplier available to you. You can do this by calling the D.C. Public Service Commission, (202) 626-5100 or visit the Commission's web site, www.dcpsc.org . If you are approached by a competitive supplier, you should know your Price to Compare. Pepco provides each customer with an individual Price to Compare on the monthly electricity bill. Effective June 1, 2007, the Price to Compare for the average residential customer is about 9¢ per kWh – residential service. Your own price to compare is published each month on your Pepco bill.• Will my bill be the same or will there be new information added?
Your bill will essentially look the same. The new rates for Standard Offer Service will be reflected in the supply portion of your bill.• When will the Pepco rates be available?
The new rates are already available on our web site at www.pepco.com in the Tariff. All customers will receive an insert with their April bill detailing the new Standard Offer Service rates and the total bill impact.• What kWh consumption amount did you use to calculate the increase for the typical customer?
The kWh consumption used to calculate the annual residential bill for the typical customer is 750 kWh per month.• Will I still have a different rate in the summer than in the winter?
Yes. The SOS rates that will take effect on June 1, 2007, will be your summer rate. Winter rates will take effect with your November bill.
Frequently Asked Questions – Small General Service
• How do I compare Pepco's rate to other suppliers?
If you are able to choose another supplier, your Price to Compare for supply and transmission will be 9.19¢ per kWh, effective June 1, 2007. If you choose another electricity supplier, that supplier must notify Pepco of your switch at least 17 days prior to your scheduled meter reading date for the change to become effective on that date. Otherwise, the change will occur on the next scheduled meter reading date. Pepco will continue to provide you with reliable delivery service regardless of your choice.
