Standard Offer Service

Background

In all states that have restructured their natural gas or electric utility industries, except Texas, residential customers are offered standard offer service. This is also known as default service. Standard offer service is what consumers receive when they do not select an alternative provider or if they choose a provider who later goes out of business. Standard offer service is intended to provide an option at a stable and cost-based rate. In recent years, some industry groups have sought to end standard offer service and force residential customers into the market. Consumer advocates have strongly opposed such action because it can increase consumer costs.

STANDARD OFFER SERVICE: Policy

Ensuring service availability

In this policy: State

State policymakers should make standard offer service the default for residential customers. It should be stable, predictable, and affordable. Standard offer service should be offered to all residential customers at rates that have been approved by regulators and are cost-based, just, and reasonable.

Stable, predictable, and affordable standard offer service should always be available and automatically provided to residential customers who for any reason have stopped receiving natural gas or electricity services.

Standard offer service should include the same consumer protections that historically have been provided by traditional gas or electric utility service to these customers prior to restructuring

Policymakers should reject proposals to eliminate standard offer service and force consumers to choose a supplier.

Policymakers should reject proposals to offer variable standard offer service linked to short-term wholesale market prices or other volatile pricing strategies.