Utility default rate vs shopping supply

The default is not a rate, it is an absence

Every commercial account has a supplier of record. If you never chose one, you are on the utility's default service, sometimes called the price to compare, the standard offer or basic generation service depending on the state. It is set by a regulatory formula or by the utility's own procurement rather than by competition for your business. It moves when the formula says it moves, it has no notice deadline you control, and it has no renewal conversation. None of that is a criticism of the utility, because selling you competitive supply is not its job. The problem is that many businesses treat the default as a decision, when it is the thing that happens while no decision is made. There is also no signal that the default has stopped being reasonable: nothing on the bill compares the price you are paying with what anyone else would offer for the same usage, and no notice marks the date the formula last reset.

What the default is called, and how it is set, where you are

In a competitive market there is no single utility rate to fall back on, because the wires utility may not be a supplier at all. In Texas it is not: Provider of Last Resort service under PURA §39.352 and 16 TAC §25.43 exists for customers transferred from a retail electric provider that fails, loses certification or stops serving, and it is not the ordinary landing place for a contract that simply expires. Let a fixed contract lapse in Texas and the usual result is the existing provider's month-to-month product, priced by that supplier rather than by the market. Elsewhere the default is a product procured for a whole customer class. Illinois calls it Standard Offer Service, procured under 220 ILCS 5/16-111.5 through an Illinois Power Agency plan approved by the Illinois Commerce Commission, on a five-year planning horizon whose first planning year begins on 1 June. Ohio's Standard Service Offer is an Electric Security Plan or a Market Rate Offer approved by the Public Utilities Commission of Ohio, with generation for non-shopping customers bought at auction. Pennsylvania's default service under 66 Pa.C.S. §2807(e) is procured under a PUC-approved plan using staggered auctions, and the resulting benchmark is the Price to Compare. New Jersey's Basic Generation Service is set by an annual February auction — BGS-RSCP for residential and small commercial load, BGS-CIEP for larger commercial and industrial accounts — with the supply period generally beginning 1 June. Maryland procures Standard Offer Service in staggered, generally semiannual tranches. Different mechanisms, one shared property: none of them is set by anyone competing for your individual account.

How the price changes, and the notice you get

Because the default is procured or filed rather than negotiated, it moves on a schedule you do not control. Where the mechanism is an auction or a solicitation, the change lands when the tranche lands. Where it is a filed rate, it moves when the regulator approves the filing. Pennsylvania is the clearest example of a stated notice floor: under 52 Pa. Code §54.188(e)(2) the distribution utility must notify customers of initial default-service rates, terms and conditions at least 60 days before they take effect, and a Default Service Plan must generally be filed at least 12 months before the current plan expires. In New Jersey the electric distribution company files the Basic Generation Service proposal and the Board of Public Utilities approves the auction and its results by order, so the customer-facing rate takes effect on the approved supply-period date. In Illinois the change follows the procurement events in the ICC-approved plan and flows into the utility's Price to Compare, so there is no single statewide reset date. For an ordinary business the notice usually arrives as a bill message, an insert or a rate notice after the regulator has approved the change — which is late to be shopping on, because by then the old price is already gone.

Finding your supplier of record on the bill

You can settle the question from one recent bill. Commercial electricity bills name both the company that supplies the energy and the utility that delivers it, and they are rarely the same line. The delivery utility is fixed by the address and will not change when you switch. The name on the supply portion is your supplier of record, and if that name is the utility, then nobody has competed for your account. Where a site has several meters, check each one separately, because it is common for a business to have shopped the main meter years ago and left a second account that nobody has looked at since. Write both names down before you ask anyone for a comparison, since the answer decides what has to be checked before a quote can be built.

• One recent bill answers it: supply and delivery are named separately.
• If the supply name is the utility, nobody has competed for the account.
• Check every meter separately; unshopped second accounts are common.
• The delivery utility never changes when you switch supplier.

The questions that tell you where you stand

Do you know the name of your current supplier? If the answer is the utility's name, or that you are on whatever they give you, then you are on the default. When did someone last compete for your account? If the answer is measured in years, the default has been compounding that whole time, and the market that priced your original deal is long gone. And what would it cost to find out? One competed quote against twelve months of usage. That is the entire price of the information. Notice that all three are answerable from documents you already hold — a bill, a contract, a renewal notice — rather than from a supplier's proposal, so the case for shopping is built before anyone tries to sell you anything.

Staying put versus shopping, the honest version

Staying on the default is not always wrong. A business closing a location inside the contract term, a site with usage too small for the supply line to matter, or an account mid-term with a termination charge that outruns the gain all have reasons to sit still. The mistake is sitting still by accident, which is what the default is designed to produce: it asks nothing of you, so nothing is exactly what happens. The test is not whether the default is expensive in the abstract, but whether the gap between it and a competed price is larger than the cost and risk of moving, for the length of time you will actually be there.

What to bring to the comparison

One competed quote is the whole exercise, but it only means something if the request behind it is complete. Bring twelve months of usage and demand from your own bills, the service address and account number for each meter, the name of the supplier of record if there is one, and any notice requirement attached to your current arrangement. If you are on the default, say so, because it changes what the supplier has to check before it can price you.

• Twelve months of usage and demand from your own bills.
• Service address and account number for each meter.
• The supplier of record, or confirmation that you are on the default.
• Any notice requirement attached to the current arrangement.

Before you act on any of this

Competitive supply is not available everywhere. Municipal utilities, cooperatives and some jurisdictions offer no choice at all, and eligibility depends on the service address, the meter and the utility that serves it. An inquiry places no order and switches no supplier. It starts a conversation about what your options actually are.

PUT THE OPTIONS SIDE BY SIDE

Your comparison checklist

Common questions