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How Electricity Deregulation Works in Illinois

The 1997 law and its phase-in

Illinois's retail choice framework comes from the Electric Service Customer Choice and Rate Relief Law of 1997, which took effect on December 16, 1997. Rather than opening every customer class to competition at once, the law established a transition period — running through January 1, 2007 — during which utilities continued to offer standard bundled service to residential and small commercial customers while delivery access opened to larger commercial and industrial customers first, based on demand thresholds. By the time the transition period closed, competitive choice was available statewide across customer classes.

ComEd and Ameren Illinois: the delivery side

Two investor-owned utilities cover most of the state's delivery infrastructure. Commonwealth Edison (ComEd) serves northern Illinois, including Chicago and its suburbs, while Ameren Illinois covers most of central and southern Illinois. A small northwestern slice of the state is served by MidAmerican Energy, and Mt. Carmel Public Utility separately serves one southeastern Illinois city (though as of recent state guidance, no competitive suppliers had registered to serve Mt. Carmel customers). Whichever of these delivers to your address is unaffected by your choice of supplier — the utility remains regulated by the Illinois Commerce Commission and keeps handling outages, maintenance, and billing infrastructure.

Your three supply options as an individual customer

If you're shopping on your own (outside of a municipal aggregation program), Illinois residential customers generally choose from three paths: an Alternative Retail Electric Supplier (ARES) offering a competitive contract, the utility's own standard supply price, or — where available — the utility's Residential Real Time Pricing program, which ties your rate to actual hourly wholesale prices instead of a fixed or fixed-ish retail rate. The Illinois Power Agency is responsible for planning and competitively procuring the electricity supply that backs the utilities' standard default offering, so even customers who never shop are still on a price shaped by competitive wholesale procurement rather than a rate the utility sets unilaterally.

Municipal aggregation: Illinois's distinctive mechanic

What sets Illinois apart from most other deregulated states is how common it is for a resident's supplier to be chosen collectively rather than individually. Under state law, a municipality or county can negotiate a group electricity supply contract with a competitive supplier on behalf of its residents and small businesses, using the combined buying power of the whole community to try to secure a better rate than most individuals could get shopping alone. Most Illinois communities that use this option run it as an opt-out program: residents are notified by mail and automatically enrolled unless they return an opt-out notice, though residents can also leave the aggregation program later and switch to a different supplier or return to utility service without facing early termination fees. Some communities instead run opt-in aggregation, which requires residents to actively enroll.

A consumer protection that's specific to Illinois

Illinois residential and small commercial customers have a real structural advantage when shopping: state rules prohibit competitive suppliers from charging early termination fees or penalties to these customers when they cancel a contract to switch to a different supplier or go back to utility bundled service. That removes one of the more common friction points seen in other deregulated states, where an early exit from a supplier contract can carry a real financial penalty — in Illinois, residential shoppers can generally move on from a bad contract without that cost.

What this means if you're comparing offers

Because a large share of Illinois residents may already be enrolled in a municipal aggregation contract without having actively shopped for it themselves, the first useful step in reviewing your Illinois bill is often figuring out which of the three paths you're actually on — municipal aggregation, an individually chosen ARES, or standard utility supply — since the rate and contract terms differ meaningfully between them. From there, comparing your current per-kWh supply rate against other active offers (whether through your municipality's aggregation renewal, an individual supplier, or the utility's standard price) is the same basic exercise as in any deregulated market, just with an extra layer — the aggregation contract — that many other states don't have.

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