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District of Columbia SOS

DC – SOS Frequently Asked Questions

Overview:

Pepco delivers electricity but does not generate it. District of Columbia law requires Pepco to use a competitive bidding process each year 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 District of Columbia Public Service Commission (DC PSC). Because the new electricity supply contracts from this year’s bidding 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 annual total bill increase of 2.7 percent beginning with the June 2009 billing cycle.

Competitive bidding occurs each year over a 3-month period. Pepco purchases the electricity it needs for its SOS customers from unregulated wholesale suppliers, who own power plants and produce electricity or who buy and sell it on the wholesale market. Contracts are awarded based on lowest price.

New SOS rates are effective for the Summer on June 1 and for Winter on October 1. Each year Pepco offers about 33 percent of the total residential SOS peak load for bids.l The bids are for three-year contracts. The bidding combination of load and contract term has been approved by the DC PSC. This approach has a dampening effect on price swings.

Frequently Asked Questions:

You’ve been buying power competitively in D.C. for five years now, and each time it’s been an increase for the residential customer. When will these increases end?
The energy markets continue to be volatile, meaning prices are quick to fluctuate either up or down depending on fuel costs used to produce electricity, national or world events, weather and other factors. Since 2004 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). This means Pepco both delivers and purchases electricity for supply to its SOS customers.

How does Pepco purchase supplies for its SOS customers?
Pepco follows a DC PSC approved competitive bid process -- i.e each year Pepco offers about 33 percent  of the total residential SOS peak load for bids. The bids are for three-year contracts. This approach has a dampening effect on price swings.
 
How often do customer SOS rates change?
Each year new SOS rates are effective for the Summer on June 1 and for Winter on October 1.

How will the increase in SOS rates affect my summer, winter and annual bill?
For District residential customers, the new summer SOS rate will add about $3.49 to the average monthly bill. In October, when the new winter SOS rate takes effect in D.C., the average monthly bill of a District residential customer will increase by $2.12.

Combined, the new winter and summer supply rates for the District will increase the annual average monthly bill by $2.69.  For an average District customer who uses about 730 kWh of electricity a month this would result in an increase of 2.7 percent.

What power plant is my electricity coming from?
It’s hard to say. Four suppliers won a percentage share of the SOS load during this year’s competitive bid process, and a total of seven suppliers serve all of the SOS load. The suppliers buy and trade the energy in the PJM marketplace so tracking its origin is difficult. The bid process simply ensures that we’ll get the needed reliable and competitive supply of electricity for delivery to our customers.

Who are the suppliers that were awarded contracts for June 1 of this year?
The following suppliers won supply contracts for this year;

  • American Electric Power Service Corporation
  • Consolidated Edison Energy, Inc.
  • FPL Energy Power Marketing, Inc.
  • Hess Corporation

Who will be supplying my electricity?
Starting June 1, 2009 your electricity will be supplied by the following suppliers;

  • American Electric Power Service Corporation
  • Constellation Energy Commodities Group, Inc.
  • Consolidated Edison Energy, Inc.
  • Coral Power, LLC
  • DTE Energy Trading, Inc.
  • FPL Energy Power Marketing, Inc.
  • Hess Corporation

How much load did each supplier win and at what price?
This information is confidential in compliance with DC PSC Formal Case No. 1017 which governs the SOS bidding process.

Are my delivery rates going up as well?
Not at this time. However, Pepco does have a request pending with the District Public Service Commission to increase delivery rates. If approved, the change would increase the monthly residential bill by about $6.43 for the typical customer using 750 kilowatt hours of electricity a month.

Pepco has asked for the increase to help cover the rising costs required to provide customers with safe and reliable electric service. Factors include higher cost of capital, improvements to the electric system, increased pension expenses and general inflation. If approved, the increase would become effective in the first quarter of 2010.

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 considering a competitive supplier, you should know your Price to Compare, which is the average cost per kilowatt-hour for generation and transmission service, based on your rate classification. The Price to Compare is a tool for you to use in comparing Pepco’s SOS rates with offers from competing electricity suppliers.

Pepco provides each customer with an individual Price to Compare on the monthly electric bill. Effective June 1, 2009, the Price to Compare for the average residential customer is about 11.25 cents per kilowatt hour. Your own price to compare is published each month on your Pepco bill.

Will my bill be the same or will new information be 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 pepco.com in the Tariff section.

What kilowatt hour consumption amount did you use to calculate the SOS increase for the average customer?
The kilowatt hour consumption used to calculate the annual residential bill for the average customer is 730 kilowatt hours per month.
 
Will I still have a different rate in the summer than in the winter?
Yes. The new SOS rates that will take effect on June 1, 2009, will be your summer rate. New winter rates will take effect with your November bill. It is estimated that the average residential customer will see an increase on summer bills of 2.9 percent and an increase of 2.4 percent on winter bills. The annual average increase will be 2.7 percent.