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PSC Orders Work Group To Discuss Consultant's Recommendation On SOS Bypassable Adder, Including Benchmarking To Retail Supplier Rates
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The District of Columbia PSC has directed that an SOS working group shall be convened to discuss recommendations from a PSC-retained consultant concerning the bypassable electricity SOS adder currently used in Pecpo's electricity default service rate
Such work group shall be part of the customary Biennial Review of D.C. SOS. In addition to the consultant's specific recommendations, the work group should also include discussion of other issues raised in the 2025 SOS Biennial Review, the PSC said
The bypassable SOS Administrative Charge at Pepco-DC includes a bypassable adder. Currently, the Adder has no fixed value. Rather, any difference between the level of the set total SOS Admin. Charge and Pepco's actual administrative costs (incremental charges, uncollectible expenses, margin, and true-ups -- the components whose costs are recovered via the SOS Admin. Charge) is deemed the Adder.
The bypassable Adder is designed to be refunded to all distribution customers through a monthly rolling credit (Administrative Credit)
As first reported by EnergyChoiceMatters.com, the PSC's consultant has recommended that the bypassable SOS Adder at Pepco-DC should be, "tied more closely to competitive third-party [retail] supply pricing", to ensure that the Adder does not "undercut" competition
The PSC's consultant had stated, "The Adder provides an important function in ensuring a level, competitive playing field in Washington DC for electric supply," noting that the Adder was established as a proxy for acquisition costs (marketing) and customer care costs
"But, as the SOS Administrative Charge and the Adder are currently derived, there is very little association between the third-party marketing costs, for which the Adder is established as a proxy, and the Adder itself," the consultant had stated
See full details on the consultant's recommendations here
The PSC directed that the SOS work group specifically discuss three adder-related recommendations from the consultant's report. However, the PSC referred to such as "recommendations 4, 5, and 6," although the consultant's report did not number the recommendations in this fashion. The consultant's report had included 7 recommendations, and based on their order of listing and the PSC's reference to the recommendations being adder-related, it is understood that the PSC has directed the SOS work group to discuss the following recommendations from the consultant:
• [Consultant] recommends a potential enhancement to
Pepco’s process so that the SOS Administrative
Charge and Adder may be tied to or verified
against third-party quotes to ensure that the
Adder does not undercut competition.
• If it is determined that Pepco’s SOS
Administrative Costs exceed its SOS
Administrative Charge for any given rate class,
Pepco should increase the fixed Administrative
Charge to equal the sum of the Administrative
Cost components such that the Adder would be
zero and no negative Administrative Credit rate
would result
• The Administrative Credit should be remitted
contemporaneously to distribution customers on
a dollar-for-dollar basis such that it is immediately
passed through to distribution customers, based
on the annual revenue amount targeted to be
collected through the Adder that is charged to
SOS customers
The first work group meeting shall be convened within 60 days
Separately, the PSC denied, at this time, the inclusion in SOS rates of $420,000 in Community Renewable Energy Facilities (CREF) administration charges, "due to the lack of unsupported clarity for the individual costs". The PSC directed Pepco to provide a breakdown and further support for these costs, with the costs to be considered for potential inclusion in SOS rates effective June 1, 2027
FC 1017
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May 21, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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