The Standard Offer Programme was developed to procure power from existing producers for a period of three years The standard offer approach allows the utility to purchase energy at an established price calculated at the avoided cost of own generation (including long term energy purchases from independent power producers).  The standard offer allows for a static price, which is established each year based on the regulatory approved cost recovery and covers the variable cost of generation.  It also allows for a dynamic price option where the price is set day-ahead for each hour of the following day, indicating the avoided cost of generation based on internal scheduling of generators.