Illinois Electric Company
Electric:

Your electricity service is made up of three parts: (1) the electricity itself is provided by an electricity generator and is sometimes referred to as electricity "supply" or "generation", (2) the "transmission" of that electricity from the generation facility to your local utility, and (3) the "distribution" or "delivery" of the electricity by the utility over the electric lines that lead to your business or home. In the past, the utility provided all three parts of your electric service (supply, transmission, and distribution).

The Illinois Electric Service Customer Choice and Rate Relief Law of 1997 restructured the state's electric service industry to allow a choice of electric suppliers. With electric choice, the electric supply may now be provided by different companies known as Retail Electric Suppliers (RESs).

Currently about 75% of the electricity consumed by Illinois' commercial and industrial customers is provided by Retail Electric Suppliers

Natural Gas:

Illinois started a decade-long transition to electric choice in 1997. The two main utilities, Commonwealth Edison and Ameren (AmerenIP, AmerenCIPS and AmerenCILCO) sold their power plants and now only own the transmission and distribution wires that deliver electricity to your home or business.

Customers at ComEd, Ameren, MidAmerican Energy and Mt. Carmel Public Utilities all have the opportunity to save money by shopping for the supply portion of their electric bill.

At Ameren and ComEd, a customer's electric bill has been separated into two parts:

 Regulated distribution of power, which is still only provided by the utility, and
Supply of the electric commodity, which is open to competition.
Customers can choose to receive their electric supply from their utility, or an alternate electric provider.
 
If customers don't choose an alternative electric provider, the utilities serve customers on "default" service. Rates for default service are set by the competitive market, through a supply procurement portfolio developed by the Illinois Power Agency. The Illinois Power Agency's first procurement plan is still being developed, but as things stand now the agency would buy power once a year through a competitive solicitation. Rates would be set from the result of that procurement, depending on customer class.

Large customers at ComEd and Ameren -- 400 kilowatts (kW) and above -- have been declared "competitive" by law. This means that their default service prices are set by the hourly price in the PJM or Midwest Independent System Operator wholesale market. These hourly prices can fluctuate wildly, so most large businesses have shopped for a flat electric rate from an alternative electric provider. ComEd is currently in the process of lowering its cutoff for hourly-priced default service to 100 kW.

Existing customers below 400 kW at ComEd and Ameren are served on fixed prices set by the Illinois Power Agency's procurement plan. While the agency's plan is still being developed, initially these default service rates will only change once a year, but they could change more frequently in the future.

Customers who choose an alternate electric provider still have their power delivered to them by their local utility, and contact their utility for all outage reporting. Customers may soon to able to choose to receive either a single bill from their utility for their delivery service and energy supply service, or can receive two bills, one from each company.

The Illinois Commerce Commission has reformed the natural gas industry to give customers a chance to shop for lower natural gas rates. The state's three main gas utilities -- Nicor, Peoples Gas and North Shore Gas -- opened their service areas to allow customers to choose a different company to supply them with their gas supply. Customers choosing an alternate gas supplier will still have their gas supply delivered by the local utility, but customers will be buying their gas supply from a new company.
 
A customer's natural gas bill has been separated into two parts:

 Regulated distribution of gas, which is still only provided by the utility, and
Supply of the gas commodity, which is open to competition.
 
Customers can choose to receive their gas supply from their utility, or an alternate gas provider.

If customers do not shop for an alternate gas supplier, they receive default supply service from their utility. Under default supply service, customers pay either a "Gas Charge" or "Natural Gas Cost" charge on their utility bill to compensate the utility for arranging for their supply. These gas supply/cost charges vary monthly, meaning customers do not have price protection and can be exposed to volatile swings in monthly prices. Customers can avoid wild swings in the gas supply charge by contracting with an alternative gas supplier.

No matter who you choose to buy energy from, your local utility will continue to deliver your gas and respond to service interruptions and outages. You will still pay your utility for these services. Depending on your area, you can choose to receive a single bill from your utility listing your utility delivery charges and supply charges, or separate bills from the utility and alternate energy provider. 

Misinformation, misconceptions and misunderstandings: Natural gas choice programs de-myth-tified.  We bust the myths and set the record straight.
 
Myth: Consumers and businesses only have one choice when it comes to natural gas suppliers – their local utility.
 
Fact: Most natural gas customers have a lot of choices when selecting a natural gas supplier. The federal government deregulated the natural gas industry in the mid-1990s so that customers could choose their natural gas supplier instead of being forced to buy only from their local natural gas utility. Since then, providers like IGS Energy have entered the market with many choices for competitively priced products. Today, it’s likely you have your choice of several to more than a dozen suppliers. You can check with your state’s utility regulator for a list of certified companies.
 
Illinois: www.icc.illinois.gov 
Indiana: www.in.gov/oucc 
Kentucky: www.psc.ky.gov   
Michigan: www.michigan.gov/mpsc 
New York: www.dps.state.ny.us 
Ohio: www.puco.ohio.gov 
Pennsylvania: www.puc.state.pa.us 
Maryland: www.psc.state.md.us/ 
Virginia: www.scc.virginia.gov/ 
 
Myth: Deregulation has resulted in higher natural gas costs for consumers and businesses.
 
Fact: Deregulation has helped to bring prices down. While natural gas prices are, and always will be, subject to the principles of supply and demand, more providers means more competition – and competition leads to increased efficiency and lower prices.
 
Myth: Deregulation has caused instability in the marketplace and the disruption of natural gas service to consumers and businesses.
 
Fact: Before deregulation, natural gas was distributed inefficiently across the country and prices fluctuated wildly. Today, IGS Energy and other natural gas suppliers give consumers the ability to lock in rates at low prices with several options of competitively priced products. When you sign a contract with IGS Energy, we buy your natural gas at wholesale prices from the open market or directly from well owners. Natural gas is then scheduled by IGS to be transported via major interstate pipelines to your utility. From there, it is delivered to your business the same way it’s delivered by your local utility, so there is never a disruption in service.
   
Setting Natural Gas Prices
 
Myth: Natural gas prices always go up when the weather turns cold.
 
Fact: The price of natural gas is sensitive to several factors, but supply and demand most often determines rates in the marketplace. For example, if a large deposit of natural gas is discovered, supply may increase and the price will drop. If a winter season is not as cold as predicted and there is less demand for natural gas, the price may drop. The U.S. Department of Energy indicates that residential prices have, in fact, declined in the winter months during nearly every year of the last decade: http://www.eia.gov/dnav/ng/hist/n3010us3m.htm .  
 
 Myth: Utilities provide consumers and businesses with the best price for natural gas.
 
Fact: Utilities often increase their rates reactively when natural gas demand is high or infrastructure improvements are needed. You’ve probably read or seen news stories about how utilities ask state regulators for permission to raise prices. IGS Energy, on the other hand, can lock in your natural gas rates for a predetermined period and provide consumers with the fairest price in the marketplace.

Myth: Utilities and natural gas marketers determine what they charge consumers and businesses for natural gas.
 
Fact: Just like other commodities, the price of natural gas is determined by the market. Natural gas is bought and sold on the New York Mercantile Exchange, or NYMEX. To buy gas, a natural gas supplier like IGS Energy purchases a futures contract: an agreement between a buyer and a seller for gas to be delivered at a future date. The price of the futures contract is determined by forecasted supply and demand.
 
IGS Energy employs natural gas buyers and traders who have unparalleled industry knowledge, expertise, and experience. They work daily to find the best prices for our customers because opportunities in the natural gas market come and go with very little notice.
  
Myth: Consumers and businesses pay more for natural gas when they choose their natural gas supplier.
 
Fact: Consumers and businesses often, but not always, pay less for natural gas when they choose their natural gas supplier because they have the option to lock in fixed rates, protecting themselves from price increases. Like other commodity prices, natural gas prices can be volatile, low one month and extremely high the next. Consumers and businesses often choose to work with a natural gas supplier to eliminate that volatility.
  
Reliability
 
Myth: Choosing IGS Energy to provide natural gas sacrifices service reliability.
 
Fact: There will never be a sacrifice in reliability. Your natural gas will always be delivered to your home or place of business by your local utility, just as it always has been. IGS Energy examines the market for the lowest-priced gas it can find and then delivers that to your utility, which in turn delivers it to you.
 
Myth: Because IGS Energy does not operate the distribution system to homes or businesses, local utilities can cut off service at any time.
 
Fact: Federal and state laws require your local utility to deliver gas to your business, regardless of your chosen natural gas provider. Even so, IGS Energy works directly with your utility to make sure your business never experiences a lapse in service.
 
Myth: Because natural gas suppliers purchase and store natural gas for future use, there is a chance that supplies will run out, and service will be disrupted to homes or businesses.
 
Fact: IGS Energy is the leading independent retail supplier of natural gas in the U.S., and has a 20-plus-year track record of providing uninterrupted gas service to its more than 800,000 customers.
 
Flexibility
 
Myth: IGS Energy provides consumers and businesses with only one choice for natural gas service.
 
Fact: Unlike a natural gas utility, IGS Energy can offer consumers and businesses an array of variable and fixed-rate products, customized to meet residential and business customer needs.
  
Myth: Once a service contract is signed, IGS Energy does not allow consumers or businesses to change plans until the length of the contract runs out.
 
Fact: IGS Energy works with you to find the best solution for your business, and that may include switching to another IGS Energy rate plan that better serves the customers need. If you have a question about the terms of your contract, please contact an IGS Energy customer service representative.

Energy provider vs. energy supplier:
The difference is deregulation
 
Once upon a time in the not-too-distant past, natural gas customers had but one provider available to them, offering one price. No choice. That’s it. The deregulation of the natural gas markets in the 1980s opened the door for competition, giving rise to the independent energy supplier. Since then, natural gas marketing has become an integral part of the natural gas industry, helping to ensure a flexible, transparent, and competitive natural gas market.
 
Provider is your utility
 
A traditional public utility simply takes orders for natural gas according to rate and price schedules approved by the public utilities commission. Public utilities must abide by and react to rate changes, and pass them to their customers, for better or worse, lower or higher. The utilities are also responsible for further building and maintaining of the natural gas distribution system, and for performing safety inspections and emergency services, should they be needed.
 
Suppliers are resellers
 
Natural gas suppliers, also called marketers, actively sell natural gas – whether of their own production or aggregated from other sources – to other resellers, or directly to end-users. Suppliers are not bound by the restrictions or responsibilities of a utility. They have the ability to set their own price for natural gas based on competitive market forces, usually resulting in lower prices than the utility is able to offer.
 
Why does that matter?
 
At the end of the day, utilities and suppliers are providing the same commoditized product: natural gas. The difference comes in the supplier’s ability to offer better pricing, more stability, and excellent customer service.

The many advantages of partnering with an energy supplier.

Flexibility
Local public utilities are bound by certain regulations set by the public utilities commission, and therefore can’t be as flexible or responsive to customers’ unique service needs. But in the age of deregulation, independent suppliers have the ability to take advantage of strategic partnerships and agreements that enable them to secure more competitive product options than a public utility, keeping pricing in check. Suppliers can offer these variable and fixed-price options directly to customers.
 
Stability
Pricing resulting from activity on the futures market allows suppliers to offer longer-term price stability for their customers. Independent suppliers are able to average out the highs and lows over time, creating a more predictable environment for their customers. With a fixed-rate plan, a customer doesn’t need to worry about prices suddenly spiking and catching them off guard. This high level of price security is a real value to many natural gas customers.
 
Responsibility
Energy suppliers are essentially selling the same commodity product, and are all in competition for your natural gas business. So, securing a good price on natural gas is as important as securing a solid, trusted, reliable relationship with a customer. Any energy supplier worth its salt knows that this is where they must concentrate their efforts. It comes down to experience and relationships, leadership, being responsive to customer needs, service after the sale, and honoring agreements. If customers don’t feel like the supplier has their best interest in mind, they won’t stay.
 
Opportunity
This is a unique time in the energy market. Customers win when they have a choice. Choice keeps the competition on its toes and provides greater opportunity to bring more options to consumers.

Choosing the right energy plan
There are many ways to structure an energy plan to best benefit your unique needs. Whether you prefer the satisfaction of knowing your rate will remain the same for at least a year, the opportunity to take advantage of dips in the market, or simply want to ensure you’ll always get a better price than you would with your local utility, there’s a plan for that.
 
Ultimately, your choice of energy plan comes down to your comfort level. The great thing is, the choice is yours. And the time is now.
 
Here’s an overview of the most popular pricing plans:
Fixed Rate Plan

Ensures price certainty and predictability in your energy management decisions.
Secures your rate on the day you choose to enroll in the plan. You’re in control of the price you pay.
Remains fixed for the duration of your contract.
 
Variable Rate Plan

Rate fluctuates monthly based on open-market natural gas prices.
Maintains possibility to capitalize on dips in the natural gas market.
Does not allow for natural gas price certainty.

What to look for in a reputable energy partner.

Stability and longevity of service 
The first and most important thing to look for in an energy partner, even before price, is a strong reputation. Time is an excellent indicator of this. How long has the company been serving its community? Does it have a stable history? How many customers does the company have? How long have those relationships been in place? Seems obvious, but a company with many of satisfied long-term customers is more likely to be a better option.
 
Excellent customer service
An excellent customer service record is imperative. After all, that’s what leads to a stable and satisfying long-term relationship. Making sure your questions are answered and your needs are met may seem like table stakes, but you might be surprised how often this key element of the relationship is overlooked. After all, it’s the customer service representatives that will be your most frequent point of contact.
 
Helpful attitude and extensive knowledge of representatives.
Does the call center have convenient hours of operation? Is there a toll-free number available? When customer service representatives answer the phone, do they actually have the answers you need? Do they know what they’re talking about? Can they educate you on your specific situation and your best solution? And though it all, are they personable and courteous? If all these answers are yes, you’ve probably chosen the right energy partner. If not, give us a call.
 
When choosing your energy partner, make sure you understand…
…all the costs associated with bringing natural gas into your home or place of business, including the terms and conditions of your service contract. A thorough understanding of your obligations and agreement will eliminate any confusion or complication down the road, making for a much more comfortable relationship.
 
…the wide range of offers and rate plans the supplier offers. There are many ways to structure a plan to best benefit your unique needs. Whether you prefer long-term predictability, the opportunity to take advantage of dips in the market throughout the year, or simply want to ensure you’ll always get a better deal than you would with your local utility, there’s a plan for that.
 
…if the pricing plan is fixed, variable, or guaranteed savings. Each of these options functions differently, which sometimes leads to confusion when your bill arrives. Being educated and informed on how each of these pricing plans works not only allows you to choose the best plan for you, but eliminates any surprise or dissatisfaction with your choice.

From no choice to no-brainer: a brief history of energy choice.
To fully understand how energy choice works and why it’s a good thing, you must first know what came before it. Historically, the natural gas distribution model looked like this:

Historical Model

The government-regulated pricing and single distribution source fostered a monopolistic, constricting marketplace. So, in the mid-1990’s, the federal government deregulated the industry (and the setting of prices at the wellhead), opening the door for independent competition, opportunity, and free-market equilibrium. The competitive gas-distribution model now looked like this:

Competitive Model

Competition = Control
Today, as more and more areas become deregulated, the proliferation of natural gas suppliers (also called Marketers) offers consumers an alternative, giving them the opportunity to choose their natural gas supplier instead of being forced to buy from the utility. In addition, most independent suppliers offer many fixed and variable pricing options, so customers can choose the plan that works best for them and realize true savings.
 
Ultimately, energy choice results in more stability, more security & less risk for consumers. No-brainer, indeed.

What is natural gas deregulation?

Natural gas deregulation legislation opened up the natural gas market and enabled it to operate on free market principles. Deregulation separates the sale of natural gas as a commodity from its distribution. The commodity is available at a competitive price and under competitive conditions but the delivery, facilitated by the utility, is a standard regulated charge. It is because of deregulation, that suppliers like IGS Energy have entered the market with competitively priced products. Today, it’s likely you have a choice of several natural gas suppliers. You can check with your state’s utility regulator below for a list of certified companies. Illinois: www.icc.illinois.gov  Indiana: www.in.gov/oucc  Kentucky: www.psc.ky.gov  Michigan: www.michigan.gov/mpsc  New York: www.dps.state.ny.us  Ohio: www.puco.ohio.gov  Pennsylvania: www.puc.state.pa.us  Virginia: www.scc.virginia.gov  Maryland: www.psc.state.md.us 

What is a natural gas marketer?

A natural gas marketer is a company that acquires natural gas, either from natural gas wells, well-owners or the open market, and supplies it to consumers. A natural gas marketer is not your local natural gas utility. Marketers do not operate pipelines which carry natural gas across regions, states and cities and into homes or businesses. Natural gas marketers simply purchase and supply natural gas, which is then delivered to your home or business by your local utility.

Why not choose a utility to supply natural gas?

You can. However, natural gas marketers are able to provide customers with a more flexible array of offerings or rate plans that may better serve customers' specific energy needs, whereas utilities are often not able to offer price options.

 Deregulation and Competition in Illinois

The Illinois Electric Service Customer Choice and Rate Relief Law ("Customer Choice Act"), enacted in December of 1997, was landmark legislation that restructured the electricity industry in the State of Illinois. Illinois was among several states in the nation that joined the federal government in a regulatory paradigm for electric utilities, allowing a shift from the traditional cost of service regulation to a greater reliance on market forces to discipline the price of power supplies. The General Assembly embraced the restructuring model as a more economically efficient model. The Customer Choice Act was designed to provide greater choice and additional value through innovative products and services tailored to the individual retail customer while, at the same time, maintaining or enhancing system reliability.

The Customer Choice Act required Illinois electric utilities to unbundle the elements of electricity service, creating a competitive generation market for energy supply, while the delivery of the energy - transmission and distribution - remained regulated. This restructuring comprised two parts. First, the Customer Choice Act permitted Illinois electric utilities to divest their generation assets to affiliated and unaffiliated entities and allowed alternative retail suppliers to compete with the incumbent utility to sell power to retail customers. Supplier choice for commercial and industrial customers was phased-in from October 1999 through October 2000. 

March 27, 2011
The Illinois Commerce Commission declared electric customers at the Ameren Illinois utilities with peak demands between 150 kilowatts (kW) and 400 kW to be “competitive,” meaning these customers no longer require traditional “default service” from Ameren.

Under traditional default service, which serves as a backstop source for power supplies, customers who do not choose to buy electricity from a competing alternative retail electric supplier are served by their utility, in this case Ameren, under a fixed default service electric rate .  This default service rate was generally set for the entire year, though it could vary slightly month to month to reflect monthly reconciliations.  However, the energy price was the same, flat rate for every kilowatt-hour consumed during a particularly month, regardless of the time of day.

This flat  electricity rate will eventually be eliminated for customers at Ameren in the 150 kW to 400 kW class, just as it has already been eliminated for larger customers above 400 kW, and many mid-sized and large customers at neighboring Commonwealth Edison.  The 150 kW to 400 kW customer class includes many mid-sized businesses, including grocery stores, department stores, and similar retail spaces, as well as mid-sized office buildings.

Instead of receiving a fixed energy price , these customers will eventually be forced to pay a fluctuating hourly rate for default electric service from Ameren.  In other words, the price of electricity supply will float with the wholesale market — it may be 5¢ per kilowatt-hour in the morning, but 20¢ per kilowatt-hour in the afternoon.

For new customers, this hourly pricing will start May 1, 2011, and there will be a three-year transition to hourly pricing for customers that are currently taking Ameren’s fixed price default service.  Customers who shop for an alternative retail electric supplier don’t have to pay the hourly electric rates and can receive a flat rate for all hours of the day.

The hourly-priced default service is typically a bad deal for most customers, because electric rates are extremely volatile during the day, and can spike as high as three to four times the normal, flat rate that customers are used to paying.  This means customers at Ameren who are pushed onto hourly-priced default service could see their monthly rates double or triple, depending on when they use electricity .

The hourly rates shoot up when the electric grid is most stressed, and usage is at its peak — such as hot summer afternoons when air conditioning load is maximized.  Because of all the extra demand, more power plants must come online, and these extra plants, called “peakers,” are much more expensive than the “baseload” plants which meet most of the normal everyday demand for electricity.  The use of more expensive plants drives up the electricity cost , exposing customers to higher rates if they must pay the real-time hourly price for electricity.

Customers can avoid these price spikes by shopping for a competing electric supplier.  While Ameren by law must charge an hourly price for electricity, competing electric suppliers can offer customers a fixed rate that shields them from price spikes on hot summer days.  This alone saves customers money on their electric bills ; however, the competing electric suppliers also offer rates lower than Ameren’s “normal” rate, providing customers with a win-win.  

The market for residential suppliers that can compete with Comed/Ameren has only just opened up. The Chicago Tribune only reported this on January 27th 2011!

http://www.chicagotribune.com/business/ct-biz-0126-
electricity-20110126,0,6622573.story 

11) Why is Comed OK with this?

Comed have been mandated, by deregulation, to compete with other Retail Electricity Suppliers (RES). The deregulation laws can be found here http://bit.ly/gXzCc1

And Comed actually make most of their money from the transmission, distribution and maintenance of the grid (those transformers and lines that carry the electricity to your home) and we still pay them for that. So this market structure suits them fine…