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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
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
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.
New York: www.dps.state.ny.us
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
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
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
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.
Myth: Choosing IGS Energy to provide natural gas sacrifices service
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
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
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.
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.
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
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
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
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
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
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:
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:
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.
New York: www.dps.state.ny.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
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.
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
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
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!
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…
SERVICE AREA MAP
Natural Gas Utilities Include:
Municipal Natural Gas Dept.
Municipal Gas Co.
Municipal Natural Gas Dept.
Rive Gas System
Light and Gas Dept.
Public Utility Commission
Illinois Light Co.
City Village of
Municipal Gas System
Municipal Natural Gas Dept.
Water and Gas Dept.
Electric and Gas Dept.
Rock Municipal Gas Co.
Municipal Gas and Light Dept.
Tower Municipal Gas System
Light and Power Dept.
Water Gas and Light Dept.
Municipal Light Gas and Water
Carmel Public Utility Co.
Boston Municipal Gas System
City Municipal Gas System
Shore Gas Co.
Illinois Gas Co.
Gas and Water Co.
Gas Light and Coke Co.
Hill Village of
Bud Municipal Utilities
Electric and Gas Utility
Municipal Power and Light
Municipal Gas Co.
Municipal Utility Dept.
Municipal Gas System
Light and Power
Hall Gas System