ComEd's Purchased Electricity Adjustment (PEA): How it Impacts Your Business's Monthly Bill

For many Illinois business owners, opening the ComEd bill can feel like high-stakes roulette. Even with energy-saving measures, the "Supply" section fluctuates wildly. Look closely at the fine print, and you’ll find the Purchased Electricity Adjustment (PEA).

Understanding the ComEd PEA charge is a financial necessity for maintaining a predictable budget. This adjustment can swing your effective rate significantly without warning. In this guide, we deconstruct the PEA in Illinois, explain why it makes your bill unpredictable, and provide strategies to lower your commercial ComEd costs.

That Mysterious 'PEA' Charge on Your ComEd Bill? Here's What It Really Means

To understand the PEA, you must first understand how ComEd functions in Illinois's deregulated market. ComEd is primarily a delivery company; they don't own power plants. For customers who haven't switched to a third-party retail electric supplier (RES), ComEd acts as the default supplier.

When you are on "ComEd supply," the utility buys electricity through auctions managed by the Illinois Power Agency (IPA) to meet the needs of millions of customers.

The Definition of the Purchased Electricity Adjustment (PEA)

The Purchased Electricity Adjustment (PEA) is a monthly reconciling charge or credit for customers on ComEd supply. It ensures ComEd recovers exactly what it paid for electricity—no more, no less.

IPA auction prices are based on forecasts and rarely match real-time costs exactly. Electricity prices fluctuate based on weather, fuel costs, and demand. The PEA serves as the "true-up" mechanism for the difference between the fixed "Price to Compare" (PTC) and the actual procurement cost.

How the PEA is Calculated

The PEA is calculated as a cents-per-kilowatt-hour (kWh) charge or credit. It is added to (or subtracted from) the base supply rate.

Base Supply Rate: This is the fixed price determined by the IPA auctions (e.g., 6.8 cents per kWh).
PEA Adjustment: This is the variable component (e.g., +0.5 cents or -0.3 cents).
Total Supply Charge: The sum of the base rate and the PEA.

Crucially, the PEA is limited by law. For residential and small business customers, the PEA cannot exceed a 0.5-cent-per-kWh charge or credit in either direction (positive or negative) in any given month. While 0.5 cents might sound small, for a business consuming 50,000 kWh per month, a 0.5-cent swing represents a $250 monthly variance on a single line item. Over a year, that volatility can add thousands of dollars in unbudgeted expenses.

Historical Context and Regulatory Oversight

The PEA didn't always exist in its current form. To understand why we have it today, we have to look back at the Illinois Electric Service Customer Choice and Rate Relief Law of 1997. This landmark legislation began the process of decoupling energy generation from energy delivery.

Before 1997, ComEd was a vertically integrated utility. They owned the plants, they owned the wires, and they set the rates. Under deregulation, ComEd sold its generating assets, allowing new retail suppliers to enter the market. The PEA was introduced as a protection mechanism. Since they no longer controlled power production, they could not absorb losses if market prices spiked, nor could they keep profits if prices fell. The PEA ensures a "neutral" financial position for the utility regarding power procurement.

Every month, ComEd must file its proposed PEA with the Illinois Commerce Commission (ICC). The ICC reviews the utility's procurement costs and ensures the adjustment is calculated correctly. While this provides transparency, it doesn't change the fact that the business owner ultimately bears the market risk. For larger commercial customers (typically over 100 kW), the PEA may be replaced by real-time hourly pricing, making it even more important to understand your specific tariff.

The #1 Reason Your Illinois Business's Energy Costs Are So Unpredictable

If you’ve ever wondered why your ComEd business bill varies so much even when your usage remains stable, the Purchased Electricity Adjustment is the primary culprit. While weather-driven usage is the most obvious factor in energy costs, the PEA is the "invisible hand" that changes the price you pay for every single kilowatt-hour.

The Problem with "Market Lag"

The PEA is inherently reactive. It looks at the costs ComEd incurred in previous months and adjusts current bills to compensate. This creates a "lag" effect. You might see a high PEA charge in a month where market prices are actually falling, simply because ComEd is still trying to recover costs from a previous heatwave or cold snap.

For a business trying to forecast quarterly or annual expenses, this lag makes understanding my ComEd business bill nearly impossible. You are essentially paying for yesterday’s market volatility on today’s invoice.

The Role of the Illinois Power Agency (IPA)

The IPA is a state agency responsible for overseeing the electricity procurement plans for ComEd and Ameren Illinois. They don't buy the power themselves, but they design the auctions that determine which wholesale suppliers will provide electricity to utility customers.

The IPA's goal is to secure the "lowest total cost" over time, but their procurement strategy involves buying power in "blocks" months or even years in advance. This hedging strategy is meant to smooth out prices, but it's not perfect. If the IPA hedges 70% of the load and the remaining 30% has to be bought on the spot market during a time of extreme price spikes (like a polar vortex), the PEA will surge to cover that 30% gap.

The Impact of Illinois' Renewable Energy Transition

Illinois is currently undergoing a massive shift in its energy landscape, driven by the Climate and Equitable Jobs Act (CEJA). While this transition toward carbon-free energy is vital for the state's future, it introduces new variables into the wholesale electricity market. As older coal and gas plants retire and are replaced by intermittent wind and solar, the "balancing" costs managed through the PEA can become more volatile.

When there is a sudden drop in wind production or a cloud cover event that reduces solar output, the grid must rely on more expensive "peaker" plants to maintain stability. These costs eventually trickle down to the default supply customers through the Purchased Electricity Adjustment Illinois mechanism. Furthermore, the costs of Renewable Energy Certificates (RECs) and other carbon-free mandates are often woven into the broader supply costs that the PEA attempts to reconcile.

The "Price to Compare" Trap

ComEd publishes a "Price to Compare" (PTC) to help businesses evaluate whether they should stay with the utility or switch to a retail supplier. However, many business owners make the mistake of looking only at the base PTC and ignoring the PEA.

A retail supplier might offer a rate of 7.2 cents per kWh. If the ComEd PTC is 6.9 cents, the business owner might think staying with ComEd is the better deal. But if the PEA has been averaging a 0.4-cent charge over the last six months, the actual ComEd rate is 7.3 cents. By ignoring the PEA, the business is effectively paying more than they would with a fixed-rate contract.

Can You Escape the PEA Rollercoaster? 3 Proven Strategies to Stabilize Your ComEd Bill

The good news is that Illinois is a choice state. You are not forced to accept the volatility of ComEd’s default supply and the ever-changing PEA. Commercial entities have several tools at their disposal to mitigate risk and gain budget certainty.

Strategy 1: Switch to a Fixed-Rate Retail Energy Supply

The most direct way to eliminate the PEA from your life is to switch to a Retail Electric Supplier (RES). When you sign a contract with a third-party supplier, you are no longer on "ComEd supply." Instead, you are on a "Competitive Supply" plan.

How it works:

You negotiate a fixed price per kWh with a supplier (e.g., 7.1 cents for 24 months).
This rate is locked in. It does not change regardless of market volatility, weather, or IPA auction results.
The PEA charge disappears from your bill. Because the supplier is responsible for procuring your power at a pre-agreed price, there is no need for a "true-up" adjustment from the utility.

For many businesses, the value of a fixed-rate contract isn't just about finding the lowest possible price—it's about the predictability. Knowing exactly what your electricity will cost for the next two or three years allows you to allocate capital to other areas of the business without fearing a "bill shock" in July or August.

Strategy 2: Implement Peak Demand Management

While the PEA affects the price you pay for energy, your "Demand" charges (often listed as "Delivery" or "Capacity" charges) are based on how you use energy—specifically, your highest point of usage during the month.

In Illinois, and specifically within the PJM grid region that ComEd operates in, a significant portion of your bill is determined by your Peak Load Contribution (PLC). This is calculated based on your usage during the five highest-demand hours on the entire grid during the previous summer.

To lower your commercial ComEd bill through demand management:

Load Shifting: Move energy-intensive processes (like heavy machinery or laundry) to off-peak hours (evenings or weekends).
Peak Shaving: Use on-site generation or battery storage to reduce your draw from the grid during high-demand periods.
HVAC Optimization: Use smart thermostats and building automation systems to "pre-cool" your facility before the afternoon heat peaks.

Reducing your peak demand not only lowers your delivery charges but also makes you a more attractive customer for retail suppliers, who may offer you better fixed rates because your "load profile" is easier and cheaper for them to serve.

Strategy 3: Invest in Energy Efficiency and Building Controls

The most certain way to lower your energy costs is to use less energy. However, for a business, "using less" shouldn't mean "doing less." It means using energy more intelligently.

LED Lighting Retrofits: Still one of the highest ROIs in energy management. LED lighting uses 75% less energy than traditional incandescent or fluorescent bulbs and lasts significantly longer. Variable Frequency Drives (VFDs): Installing VFDs on motors, pumps, and fans allows them to run at the exact speed needed for the task, rather than running at 100% capacity all the time. Real-Time Monitoring: You cannot manage what you do not measure. By installing sub-meters and using energy management software, you can identify "energy leaks"—equipment running overnight when it should be off, or cooling systems fighting against heating systems.

By reducing your overall consumption, you minimize the total impact of any rate volatility. A 0.5-cent PEA charge hurts a lot less when you’ve already reduced your total kWh usage by 20%.

Case Study: The Cost of Indecision

Consider a hypothetical medium-sized plastic injection molding facility in Elgin, Illinois. They consume roughly 200,000 kWh per month.

In 2024, the business owner was offered a 24-month fixed rate of 7.2 cents per kWh from a retail supplier. At the time, the ComEd Price to Compare was 6.9 cents per kWh. Believing they were saving $600 a month ($0.003 x 200,000), the owner decided to stay with ComEd.

However, over the next six months, a series of supply-side disruptions and unexpected grid congestion led to an average PEA charge of +0.45 cents per kWh.

Projected Cost (ComEd): $13,800/month (6.9 cents)
Actual Cost (ComEd with PEA): $14,700/month (7.35 cents)
Cost with Retail Supplier: $14,400/month (7.2 cents)

By staying with the utility to "save" 0.3 cents, the business actually ended up paying 0.15 cents MORE than the fixed-rate offer, plus they suffered the stress of unpredictable monthly budget variances. Over those six months, the indecision cost the company $1,800 in direct overpayments and countless hours of frustration for the accounting department.

Take Control: How a Free Bill Analysis Unlocks Predictable Commercial Energy Rates

Navigating the complexities of ComEd commercial electricity rates can be overwhelming. Between the PEA, transmission charges, capacity tags, and various riders, it’s easy for a business owner to feel like the utility bill is a "black box" that they have no control over.

This is where a professional energy bill analysis becomes invaluable.

Supply vs. Delivery: Decoding the Two Halves of Your Bill

To truly take control, you must understand that your bill is split into two distinct sections: Supply and Delivery.

Supply: This is the cost of the actual electricity. This is the part you can shop for. The PEA lives here. If you switch to a retail supplier, this section is replaced by the supplier's charges.
Delivery: This is the cost of moving the electricity to your building. This remains with ComEd regardless of who you buy your power from. However, even this section has controllable elements, such as demand charges and power factor penalties.

A common misconception is that switching suppliers will result in "double billing." This is false. In Illinois, you receive one consolidated bill from ComEd. The only difference is that the "Supply" section will show your chosen supplier's name and your contracted rate instead of the utility's default rate and the PEA.

What is a Bill Analysis?

A bill analysis is a deep dive into your historical energy usage and your current contract structure. It goes beyond looking at the total amount due and breaks down every single line item to see where money is being wasted.

Key areas covered in a bill analysis:

Supply Comparison: Comparing your current effective rate (including the PEA) against the current market rates available from retail suppliers. We look at "all-in" costs to ensure an apples-to-apples comparison.
Rider Review: Identifying if you are being charged for utility riders that you may be exempt from. For example, some businesses qualify for exemptions from the Electricity Excise Tax or the Renewable Energy Adjustment under specific circumstances.
Demand Analysis: Evaluating your Peak Load Contribution (PLC) and Network Service Peak Load (NSPL). These "tags" determine your capacity and transmission costs for the entire year. If your tags were set during an unusually high-usage period, we can help you plan to lower them for the following year.
Tax Exemptions: Checking if your business qualifies for manufacturing or nonprofit tax exemptions on energy purchases that haven't been applied. In Illinois, manufacturers can often claim a sales tax exemption on the energy used in the production process.

The Myth of the "Small Business"

Many small-to-medium business (SMB) owners believe they are too small to benefit from a retail supply contract or a professional energy audit. This is a myth. In many cases, SMBs are actually more impacted by the PEA because they have thinner margins and less cash flow to absorb sudden spikes in utility costs.

Whether you are a local restaurant in Naperville, a manufacturing plant in Rockford, or a retail shop in the Chicago Loop, the mechanics of the ComEd bill are the same. You are paying for volatility that you don't have to. Large corporations have entire departments dedicated to managing these costs; for an SMB, a free bill analysis is the equivalent of having an "outsourced energy manager" looking out for your interests.

Future Outlook: 2026 and Beyond

As we move through 2026, several factors will influence the PEA:

Capacity Market Reform: Significant reforms to the PJM Interconnection capacity market are likely to increase the "Supply" costs that the IPA manages, potentially leading to more volatile adjustments.
Electrification and Grid Growth: Transitioning to electric vehicle (EV) fleets and heat pumps is increasing overall grid demand, creating local congestion that adds to reconciliation costs.
Data Center Expansion: The growth of data centers in Northern Illinois places immense pressure on the power supply, often leading to higher wholesale prices during peak hours.

Your Next Steps

The energy market doesn't wait for your budget cycle to begin. Prices move every day, and the PEA is recalculated every month. To take control of your costs:

Gather your bills: Have at least 12 months of ComEd invoices ready. This allows an analyst to see your usage across all seasons and identify trends in your PEA charges.
Understand your goals: Are you looking for the absolute lowest price (even if it's variable), or are you looking for the highest level of budget certainty (fixed)? Most businesses find that a "fixed-price, full-swing" contract is the best balance of risk and reward.
Get an expert opinion: At Illinois Commercial Energy, we specialize in helping Illinois businesses demystify their utility bills. We provide the data you need to decide if staying with ComEd or moving to a retail supplier is the right move for your bottom line.

Conclusion

The ComEd Purchased Electricity Adjustment (PEA) is a reminder that in the world of utility-supplied energy, nothing is truly "fixed." As long as you remain on default supply, your business is subject to the whims of the wholesale market, the timing of state-mandated auctions, and the reconciliation requirements of the utility.

By understanding the PEA, recognizing the value of retail supply, and implementing smart demand management strategies, you can transform your energy bill from an unpredictable liability into a managed, predictable operating expense. Don't let a mysterious line item dictate your profitability. Take the first step toward energy independence today.

Looking for more ways to optimize your energy strategy? Check out our guides on understanding the ComEd Capacity Charge and how to time your supply RFP.