Price to Compare Formula Changing in Maryland
July 6, 2010
The State of Maryland's Public Service Commission (PSC) has finally ordered utility customers to change the way they compute their "Price to Compare" (sometimes called "Cost to Compare") figure they use on their bills.
The idea behind Price to Compare was to make it easy for consumers to come up with one simple figure to compare the rate charged by their utility for electricity to what alternative suppliers (like the one we sell to our residential customers) charge, rate-wise. You can see the Price to Compare on your monthly bill, usually in the same area as your usage statistics, but the location varies among utilities.
In theory, you are supposed to have one simple number, to conduct an apples-to-apples comparison. In reality, as our friend Jay Hancock of the Baltimore Sun says:
Yet the (Price to Compare number) was often months old, and confusingly blended seasonal costs into an annual mishmash.
That's being polite. The Gazette said:
The (PSC) found that the "price to compare" — which it ordered utilities to post on customers' bills seven years ago so that consumers could examine supply costs — does not provide enough useful pricing information to consumers and could mislead them.
How so? Well, here's what Pepco's Web site said about how Price to Compare is computed:
The Price to Compare is calculated by taking the total kilowatt-hour usage for all customers within a specific rate class for a 12-month period and multiplying that amount by the actual generation and transmission rates. This total amount is then divided by the total 12-month kilowatt-hour usage which provides an average per kilowatt-hour rate for generation and transmission for the rate class, which is the Price to Compare.
Congratulations if you are still awake. Going forward, though, here's how Price to Compare will work (from The Gazette):
The PSC ordered utilities to replace that single comparison point — both on bills and their company Websites — with detailed prices for their standard-offer service, including their current charge per kilowatt-hour and the end date for that price; the charge per kilowatt-hour thereafter and its end date; and a notice that the price beyond that date has not been set. The end dates were required because prices change with contracts, which are bid twice annually, and typically are higher in the summer.
Utilities also were ordered to post a weighted average price for their standard offer service as well as the date through which that average applies.
This does mean more information, and a bit more of a challenge for the utilities (and companies like ours) to explain rates and billing more completely. But it's either that or rely on a system that could provide misleading information.
I know that in my own dealings with customers, I don't even rely on the Price to Compare anymore. I just use their current rates compared to our rate offerings (which still beat the utilities, by the way). The new system will be much closer to that, which is good for the customer.
Utility Choice is a concept that's still pretty new to Maryland residential utility account holders, and there's still a lot of questions about how it works. The Price to Compare figure did them no favors, and only added confusion to the mix, making our jobs harder. This latest action by the PSC should help consumers make a more-informed decision about their rates.
For most business owners in Washington, D.C. and Maryland, June 1st marks the unofficial start of summer: the return of rooftop happy hours, tourists swarming the National Mall, and the inevitable cranking of the HVAC system. But in the world of energy management, June 1st is something much more significant. It is the "Energy New Year." If you manage a commercial property, a non-profit, or a restaurant, this date represents the reset button for how your utility costs are calculated for the next twelve months. While many decision-makers focus solely on the "supply rate" on their bill, there is a hidden mechanism called the Peak Load Contribution (PLC) that could be quietly inflating your costs by thousands of dollars The good news? You aren’t powerless. By understanding how the grid works and taking a few strategic steps this spring, you can "beat the surge" and secure better financial predictability for your organization. The June 1st Milestone: Why It’s the "Energy New Year" In the Mid-Atlantic region: specifically within the territories served by utilities like Pepco and BGE: we operate under the PJM Interconnection . PJM is the regional transmission organization that coordinates the movement of wholesale electricity across 13 states and D.C. Every year on June 1st, PJM begins a new "delivery year." This is the date when the "Capacity Tags" (or PLC) assigned to every commercial building are updated based on the previous summer’s usage. Why does this matter to you? Because the capacity charge often makes up 25% to 40% of a commercial electricity bill. If your building was inefficient during the hottest days of last summer, you are about to pay the price for it starting this June. Conversely, what you do this summer will dictate your fixed costs for June 2027 through May 2028. The Hidden Problem: Understanding Capacity Charges and Your PLC Most business owners look at their bill and see "Kilowatt-hours (kWh)": that’s how much energy you used. But the Capacity Charge is based on your "Peak Load Contribution." Think of it like a "reservation fee" for the grid. PJM needs to ensure there is enough power available if every single building turned on every single light and AC unit at the exact same moment. To fund this readiness, they charge businesses based on their highest usage during the grid's "Five Peak Hours" of the previous summer. The Problem: If your restaurant, condo building, or school had a massive spike in usage on a Tuesday afternoon in July when the grid was stressed, your PLC (or Capacity Tag) will be high. You will then be billed at that "peak" rate every single month for the following year, regardless of how little energy you use in the winter. For many commercial clients, this is a "ghost charge" that feels impossible to control. But with the right services , it becomes a manageable variable.
For business owners in Maryland, Washington, DC, and Virginia —right here in our backyard —energy costs are more than just a line item: they are a significant variable that can impact quarterly profitability and long-term operational planning. In recent years, the natural gas market has been characterized by notable volatility. From global supply chain disruptions to shifting domestic production levels, the price you pay for the blue flame in your furnace or the heat in your commercial kitchen has likely felt like a moving target. At Electric Advisors, Inc. , we believe that data-driven decision-making is the only way to effectively manage utility expenses. To help you understand where the market has been and where it is going, we have analyzed the historical procurement costs for Washington Gas (WGL) and compared them to the current opportunities available through competitive suppliers across Maryland, Washington, DC, and Virginia. The results are clear: across the WGL service territory in MD, DC, and VA , the cost of sticking with the utility’s default Purchased Gas Charge (PGC) may be significantly higher than many business owners realize. The Benchmark: Washington Gas Historical PGC Rates in Maryland, DC, and Virginia Every month, Washington Gas updates its Purchased Gas Charge (PGC) . This is the rate at which the utility passes through the cost of the natural gas it buys on the wholesale market to its customers. By law, the utility does not make a profit on the gas itself; they make their money on the delivery and infrastructure. However, the price they pay—and the price you eventually see on your bill—is subject to the fluctuations of the monthly wholesale market. For businesses in the broader WGL footprint, the important takeaway is this: Washington Gas default supply pricing and competitive market opportunities are consistent across its service territory in Maryland, Washington, DC, and Virginia. In other words, the same benchmark applies whether your business is in suburban Maryland, downtown DC, or Northern Virginia. Looking back at the last 24 months across the WGL service territory in MD, DC, and VA , we see a story of dramatic shifts: 24-Month Average WGL PGC: Approximately $0.68 per therm . The 2025 Spike: In April 2025, rates peaked at a staggering $0.8085 per therm . The 2026 Moderation: As of April 2026, the WGL rate has settled to $0.6382 per therm . While the 2026 rate is a welcome decrease from the highs of the previous year, it remains significantly higher than the rates seen a decade ago. For context, in 2010, the rate hovered around $0.32 per therm. We have seen a steady, long-term upward trend that necessitates a more proactive approach to commercial natural gas rates .
Helping Washington D.C. businesses take advantage of their sales tax exemption opportunities. Did you know that restaurants don't have to pay sales tax?