Lawrence A. LaMotte is President of Energy Options, LLC, and a Public Service Commission licensed broker/aggregator of retail electricity. Mr. LaMotte and associates provide the necessary market expertise and resources for large and mid sized businesses, institutions and aggregation groups to make informed business decisions as to when and how to choose an energy supplier as well as provide other energy advisory services that are designed to mitigate energy costs. Mr. LaMotte’s prior experience includes serving as Vice President of Marketing and Business Development with Trigen Baltimore Energy Corporation, and as a member of the Environmental Matters Committee when he represented Baltimore County for 12 years in the Maryland House of Delegates.

The second edition of "Ask Larry" includes questions and answers on the topic of "Standard Offer Service (SOS)" and "Peak Load Contribution (PLC)". If you have questions that you would like Larry to answer regarding the purchase of electricity in the marketplace, please send him your question via email to llamotte@energyoptionsllc.com .

1. Last month, you talked about Standard Offer Service (SOS) and Provider of Last Resort (POLR) rates. How long will SOS and POLR rates be around?

The new market driven SOS that began July 1st of this year will be around for one, two or four years depending upon what type of customer one is. Thereafter, it is not clear how the SOS will operate. The Public Service Commissions (PSC) will set guidelines for SOS after the current provisions expire.

2. How do I know what type of Customer my business is and when will the market driven SOS rates expire?

With the exception of Allegheny Power customers, the current SOS for all Type I Customers with a Peak Load Contribution (PLC) less than 60 kilowatts (KW), will expire May 31, 2008. For Allegheny customers the date is December 31, 2008. With the exception of Allegheny Power customers, the current SOS for all Type II Customers with a Peak Load Contribution between 60 KW and 600 KW, will expire May 31, 2006. For Allegheny customers the date is December 31, 2006. With the exception of Allegheny Power customers, the current SOS for all Type III Customers with a Peak Load Contribution above 600 KW, will expire May 31, 2005. For Allegheny customers the date is December 31, 2005.

3. What is Peak Load Contribution (PLC)?

First, it is not billing demand. Rather it is the peak amount of electricity a customer uses. In accordance with the guidelines set by the regional transmission organization, PJM, it is based upon the 5 peak hours occurring on 5 different days between June 1st and September 30th of each year. It is reflected in the subsequent year’s costs.

4. Why is PLC important?

It is important for several reasons. First, it is used to determine the customer’s share of the transmission obligations on the local distribution or delivery system (BGE, Pepco, Connective, and Allegheny). It is also used to determine what type (See question 2 above) of SOS rate a customer qualifies for. Finally, Electric suppliers form their pricing offers to customers using, in part, the customer’s PLC.

5. If a customer is currently on SOS, how does a customer know when to enter into the marketplace to purchase electricity?

A customer will have to do his/her homework because the price of electricity is a commodity where the price changes every hour. A technical analysis should be made regarding the customer’s usage. A market strategy should also be developed that takes into consideration the goals the customers would like to accomplish. In addition a constant scrutiny of the electric market will provide some guidance in determining when a customer should enter the market or remain on SOS. Please note that this process is on-going regardless of whether a customer has an electric contract or not with a supplier. The new market driven SOS that began July 1st of this year will be around for one, two or four years depending upon what type of customer one is. Thereafter, it is not clear how the SOS will operate. The Public Service Commissions (PSC) will set guidelines for SOS after the current provisions expire.