History of Deregulation in Illinois
In a deregulated energy market, electricity consumers can choose to purchase their energy from utilities or ARES. Learn more about Illinois’ energy deregulation history.
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Why Energy Deregulation?
Energy deregulation is a practice that has been adopted in many states across the country. The actual policies of deregulation will vary from state to state, but the general practice is the same. In a deregulated energy market, both commercial and residential power consumers can choose to purchase their energy from their designated municipal utility companies, or they can opt to purchase their energy from various retail energy suppliers. In Illinois, these are commonly referred to as Alternative Retail Electric Suppliers or ARES for short. The goal of deregulation is to increase pricing competition among providers so that consumers can have more pricing options.
History Of Energy Deregulation in Illinois
Deregulation came to the state of Illinois in 1997 when the Illinois Electric Service Customer Choice and Rate Relief Law was passed. However, at the start of energy deregulation in IL, the ability to purchase from an Alternative Retail Electric Supplier (ARES) was something that was only available to large commercial energy consumers. Small businesses and residential customers were still required to purchase their electricity through their assigned Illinois utility. In order to protect homeowners and small businesses from utility rate hikes during this time, the Illinois Commerce Commission (ICC) stepped in and lowered their rates by 20%, and then froze the rates for a period of 10 years.
By 2002, residential customers gained the right to choose their own electricity supplier. Many of those customers remained with their utility supplier however, due to the ICC rate cap on utilities mentioned above, which would not expire until 2007. The resulting low utility costs made switching to an ARES less appealing at the time.
Once 2007 rolled around and public utilities were no longer limited by the ICC imposed rate cap, they were free to raise prices. During 2007, electricity costs throughout Illinois increased significantly. Most residential customers faced rate increases of approximately 50%. This faced obvious criticism, prompting amendments to the Consumer Choice Act. By mid-2007, the General Assembly had passed the Illinois Power Agency Act, which formed the Illinois Power Agency (IPA). The IPA provided relief funds to residential and small business consumers totaling around $1 billion due following the expiration of the rate cap and dramatic price increases that followed.
From 2008 to the present, the interest in retail energy providers and competition between utilities and ARES has steadily grown.
Retail Energy Suppliers Face Scrutiny
Now that the energy markets have become somewhat stabilized, there is a more even mix of both retail and commercial energy customers that are choosing between utilities and ARES. However, in recent years, retail energy providers have come under scrutiny for the way they are enticing customers to switch. In general, the complaint has been that while retail suppliers may offer lower rates to entice customers to switch to their services, they essentially bank on the fact that customers will not pay attention to the fact that their introductory rates will expire. Many households end up paying more over time than they would with utility suppliers like ComEd or Ameren.
Check With ComEd Before Shopping Retail
Many energy customers don’t realize that their utility will always manager the delivery charge, regardless of which supplier they choose. Before shopping retail, it makes sense to check with your local utility to find out their rates. Commonwealth Edison, or ComEd, updates their pricing every six month and openly publishes these rates for Illinois residents to see. These rates include supply and transmission service charge, both of which are ineligible for profit, so there is never a markup.
How to Reduce Your Utility Bill with Community Solar
Homeowners in Illinois can lower their Illinois utility costs even more when they support local renewable power by joining a Community Solar farm. The best part is, no solar panel installation is required. Community Solar Farms, like those provided by Clearway, enable homeowners and renters alike to reduce their utility supply charges by subscribing to a Community Solar Farm. With Clearway, there is a savings guarantee. * The Community Solar farms generate renewable energy for the local power grid, and in return for their subscription, customers receive solar bill credits that reduce their utility supply charge. Customers only pay Clearway $.80 for every $1.00 received in solar bill credits that reduce their utility bills, guaranteeing 20% savings. *
*Subject to credit approval. Subscription term is 20-years. Savings calculated as 20% on the value of the net metering credits generated by the residential solar subscription on the default supply service rate with the utility (ComEd or Ameren). Customers not on their utility default supply rate may not receive the same savings or any savings. Clearway is not responsible for utility delays in applying net metering credits. Terms and conditions may apply.