SOS Rates What is Your Real Electric Power Rate?

By | June 23, 2014

Standard Offer Service Rates

Your price to compare is: XXX

Your utility company just told you your rate is published on your bill under the Standard Offer Service Rate, or “Rate to Compare.”

How do you know if that is the true cost of your electric power? Is the generation rate what you are paying? It has to be, because that is what the utility told you, right?

Unfortunately, your SOS rate is not the whole story. After utility deregulation, your rate is divided into two sections. The utility always quotes the deregulated part only.

Generation and Distributions Costs

So why can’t you buy electric power for the generation rate? Because it has to be delivered to you and that has an addition cost, at least with utility grid-supplied energy anyway, and not solar energy. But we’ll leave energy independence and cost reduction via solar power for another article.

The “Price to Compare” on your utility bill can be understood with an analogy.

Grocery Store A: Sells Milk for $ 1.00 / gallon

Grocery Store B: Sells Milk for $ 1.25 / gallon

SolarCity is like store B in this analogy.

Where is it less expensive to buy milk? Look at your receipt at the check-out counter.

Store A sells the milk for $ 1.00 / gallon but charges 75 cents for the milk container.

Store B sells the milk for $ 1.25 and includes the container.

Store A tells you to compare their $ 1.00 / gallon milk price against other stores’ prices. Is this fair?

A customer buys milk from Store B for $ 1.25 / gallon knowing that he saved 50 cents on the “all-in” price calculated when everything is included but then returns home to find a coupon mailed to him from Store A advertising 90 cents / gallon. He calls the salesman at Store B and complains that he got a bad deal.

The salesman at Store B has to ask again, if the 90 cents / gallon included the container or not. The buyer says no. The salesman reminds the buyer that Store B’s price is $ 1.25 for everything, including the container.

All-In Electric Utility Rate

If the analogy sounds oversimplified, you’d be surprise at how many utility customers are misled into thinking the generation rate, or SOS rate is the rate they are paying for electricity. That would be like trying to take home the milk without a container. Good luck with that!

Next, we’ll review how to calculate your total rate so you know how much you will really save with a solar system.

 

 

To be continued…

 

One thought on “SOS Rates What is Your Real Electric Power Rate?

  1. Guru Post author

    BG&E SOS rates are about 9.6 cents per kWh right now in Maryland, but many BG&E customers pay 13-14 cents / kWh depending on their distribution and miscellaneous costs. What’s your rate?

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