Background on Electricity Restructuring

The Illinois Customer Choice law was passed in 1997. This commenced the deregulation of retail electricity in Illinois. The three segments of the vertically integrated electricity monopolies (generation, transmission and distribution) were separated. Generation was to be transformed into an open market; transmission was to be operated by a third party to allow equal access to all market participants; and distribution ownership and operations was to be retained by the resident electric monopoly (in our case, ComEd). ComEd was transformed into a “wires only” company. ComEd no longer owns any generation plants. To facilitate a manageable transition to an open retail market, and to allow ComEd to recover their stranded investments in generation, these changes were to be phased in over a seven-year period. The transition period ends January 1, 2007. 

During the transition period, ComEd froze rates at 1995 levels for commercial and industrial customers through the transition period. Since ComEd no longer owns any generation plants, to provide for their customers in the post-transition period, electricity had to be purchased from other providers. ComEd did this through the ICC-approved auction in early September 2006. This process set the electric rates from January 2007 through May 2008 (17 months). 

Since 2001, all of ComEd commercial and industrial customers have had the opportunity to purchase electricity outside of bundled service. However, because of the rate freeze, there was little financial incentive to "shop around" for electricity. Therefore, most ComEd customers are currently on bundled service. Now things are different. With ComEd's new rates becoming effective January 2007, increases in electricity expense of 20% to 45% will not be uncommon.

If you do nothing, you will default to ComEd's new, higher rates.