LOA Meaning in Business Electricity Contracts

A restaurant owner in Columbus gets a call from an energy broker. The broker promises a better rate than what AEP Ohio is charging on its Standard Service Offer. The owner says yes, and the broker emails over a one-page form before anything else happens. That form is the LOA.

It shows up in every deregulated state, in every industry, every time a business wants to shop its electricity supply. Yet most business owners sign it without knowing exactly what they just authorized. Understanding the LOA before signing is one of the lowest-effort, highest-value things a commercial energy buyer can do.

LOA stands for Letter of Authorization. In the context of business electricity, it is a written permission slip from an account holder to a third party, typically a retail electricity supplier or an energy broker, granting that party the right to:

Without a signed LOA, the regulated utility will not release the account's load data to any outside party. No data means no competitive quote, because a supplier cannot price a contract blind.

The LOA is distinct from the supply contract itself. Signing an LOA does not lock the business into a rate. It only unlocks the information exchange. The supply contract, sometimes called a contract LOA or simply an energy agreement, is the separate document that commits the business to a price and term.

The phrase "LOA in contract" describes a common shortcut: suppliers sometimes embed the authorization language inside the supply contract itself rather than sending a separate one-page form. When a business signs the full contract, it simultaneously authorizes data access and agrees to pricing and term length.

This bundled approach is legal in all six deregulated markets, but it compresses a step that deserves deliberate attention. A business that mistakes a bundled contract-LOA for a simple data-access form may not realize it has also committed to a 12-month or 24-month fixed rate.

Practical rule: if a document includes both an authorization section and a pricing section with a term length, it is a supply contract. Read the pricing terms and cancellation clauses before signing, not after.

Deregulation rules the supply side of the bill in Texas, Ohio, Pennsylvania, Massachusetts, New Jersey, and Washington DC. In each market, the regulated utility still owns the wires and meters; only the supply portion is shoppable. The LOA is the mechanism that connects a business to that competitive market, but the specifics differ by state.

Texas (PUCT): The Public Utility Commission of Texas oversees retail electric providers operating in the ERCOT grid. Texas uses a standardized electronic enrollment process, and the LOA or similar authorization is required before a REP can pull interval data or initiate a switch. The default rate here is called the Price to Compare.

Ohio (PUCO): The Public Utilities Commission of Ohio regulates the process. Ohio utilities including AEP Ohio, Ohio Edison, and Duke Energy Ohio each have their own enrollment portals. The default supply product is called the Standard Service Offer (SSO).

Pennsylvania (PA PUC): The Pennsylvania Public Utility Commission governs competition among electric generation suppliers. Pennsylvania's default supply is called Price to Compare as well, though it is set separately by each utility (PECO, PPL, Duquesne Light, and others). LOA forms follow PA PUC guidelines.

Massachusetts (MA DPU): The Department of Public Utilities oversees competitive supply. The default rate in Massachusetts is called Basic Service, set by the Department on a periodic basis for utilities like Eversource and National Grid.

New Jersey (NJBPU): The New Jersey Board of Public Utilities regulates the market. New Jersey's default supply is Basic Generation Service (BGS), procured through a statewide auction.

Washington DC (DC PSC): The Public Service Commission of the District of Columbia oversees competition for Pepco customers. The default supply product in DC is called Standard Offer Service (SOS).

In every market, the LOA triggers a utility-side data release that flows to the supplier, enabling a quoted rate. Businesses in any of these states can compare live supplier offers at ElectricRates.org's business electricity center.

A well-formed LOA for commercial electricity will include several standard fields. Knowing what to look for helps a business owner verify that the document is legitimate and properly scoped.

Account identification: Utility account number, service address, and sometimes the meter number or ESID (Electric Service Identifier in Texas).

Name of the authorized party: The supplier or broker being granted access. An LOA that names a broker rather than a specific supplier is granting data access to the brokerage, which may then shop multiple suppliers on the account's behalf.

Scope of authorization: Specific language describing what the authorized party can and cannot do. A data-only LOA should not include enrollment authority. Read this section carefully.

Duration: Most LOAs expire after a set period, commonly 30 to 180 days. An open-ended or multi-year LOA on a data-access-only document is unusual and worth questioning.

Signature block: Must be signed by a person with authority over the business account, typically an owner, officer, or authorized account manager.

Commercial electricity bills are not just about kilowatt-hour consumption. Above each utility's demand threshold, bills include a demand charge expressed in dollars per kilowatt, applied to the highest 15-minute peak recorded during the billing period. For many medium-sized businesses, the demand charge represents a significant share of the total bill.

A supplier cannot accurately price a contract for a demand-billed account without seeing interval data, which is the detailed usage recorded at 15-minute or hourly intervals. That interval data sits inside the utility's system. The LOA is what unlocks it.

This is why a generic quote based only on total monthly kilowatt-hours can be misleading for businesses with lumpy or peaky load profiles. Manufacturers, restaurants with large kitchen equipment, and medical offices with imaging machines often have peaks that dwarf their average consumption. A complete LOA that grants interval data access gives a supplier what it needs to price accurately, and it gives the business a more honest comparison.

Not every LOA presented to a business is well-intentioned. Certain terms should prompt questions before a signature goes on the page.

Unlimited scope with no expiration: An LOA that grants broad enrollment authority and never expires creates risk long after the initial supplier relationship ends.

Automatic renewal language buried in an LOA: Some documents blend an auto-renewal clause into what looks like a simple authorization form. Any mention of contract term, pricing, or renewal means the document is more than a data release.

Named broker with no named supplier: This is not necessarily harmful, but the business should understand that it is granting a brokerage the right to shop its account. Asking which suppliers the broker works with is a reasonable question.

Pressure to sign before reviewing: A legitimate supplier or broker will allow time to read the document. Urgency tactics around an LOA are a warning sign.

Businesses that want to compare offers from multiple suppliers without relying on a single broker can start at ElectricRates.org, where live business electricity rates across all six markets are updated regularly.

For a business new to competitive supply, here is the typical sequence:

1. Request quotes. Contact suppliers or use a comparison platform. At this stage, suppliers may use anonymized or estimated usage data to provide ballpark figures.

2. Sign a data-access LOA. If the quotes look promising, sign an LOA granting the supplier or broker access to interval and account data from the utility.

3. Receive accurate quotes. With real usage data in hand, the supplier issues a firm offer with a specific rate, term, and product type (fixed, variable, or indexed).

4. Review and sign the supply contract. This is the binding commitment. Compare term length, cancellation fees, and any variable components before signing.

5. Utility switch occurs. The supplier notifies the utility, and service switches on the next available meter read date. Delivery, the wires and meter, never changes.

6. Bill arrives with two supply lines. The utility bill will reflect the new supplier's rate for energy supply, while the delivery, customer charge, and any riders remain regulated and unchanged.

An LOA is a routine part of shopping commercial electricity, but routine does not mean trivial. Understanding the scope of what is being authorized, whether it is data access only or full enrollment authority, protects a business from unintended commitments.

Business owners in Texas, Ohio, Pennsylvania, Massachusetts, New Jersey, or Washington DC can compare current supplier offers without signing anything upfront. Live business electricity rates, updated as of July 2026, are available at ElectricRates.org. Each state's utility commission (PUCT, PUCO, PA PUC, MA DPU, NJBPU, and DC PSC) also maintains public resources on competitive supplier rules and consumer protections, which are worth reviewing before any contract is signed.