Illinois Commercial Energy Glossary

Illinois commercial energy has a vocabulary all its own, and the wrong assumption about a single term can lead to a poor buying decision. This glossary defines the terms that actually come up when you read a bill, evaluate an offer, or negotiate a supply contract. For the bigger picture, pair it with the Illinois deregulated energy market explained and our commercial energy procurement resources.

Market structure and participants

ARES (Alternative Retail Electric Supplier). A company licensed by the Illinois Commerce Commission to sell competitive electricity supply to eligible customers. An ARES competes with the utility's default service on the supply portion of the bill only. Verify any supplier's license at plugin.illinois.gov.

ICC (Illinois Commerce Commission). The state regulator. It licenses suppliers, approves utility delivery rates and tariffs, and enforces consumer protections. See icc.illinois.gov.

IPA (Illinois Power Agency). The state agency that procures default electricity supply for eligible customers who have not chosen a competitive supplier. Its procurement helps set the price to compare. Detailed in our IPA and default service guide.

Delivery utility. The regulated monopoly that owns the wires and delivers electricity regardless of supplier — ComEd in the north, Ameren Illinois in central and southern Illinois. It maintains the system and restores outages.

Municipal utility. A city-owned electric system, such as Naperville (via the Illinois Municipal Electric Agency) or Springfield (City Water, Light & Power). Customers of a municipal utility do not have ARES choice.

PJM. The regional wholesale market operator (PJM Interconnection) covering ComEd's territory. It runs wholesale energy and capacity markets. A PJM auction price is a wholesale figure, not a retail bill rate.

MISO. The Midcontinent Independent System Operator, the regional wholesale market covering Ameren's territory. Like PJM, its market outcomes influence but do not equal retail rates.

Supply vs. delivery

Supply. The electricity commodity itself. This is the portion eligible customers can shop competitively.

Delivery. The regulated service of transporting electricity over the utility's poles, wires, and transformers, including metering and maintenance. Delivery charges are set by tariff and do not change when you switch suppliers.

Default service (utility supply). The supply you receive automatically if you never sign a competitive contract, provided by your utility using power procured through the IPA process.

Price to compare. The utility's default supply rate, expressed so you can measure a competitive supplier's supply offer against it. It reflects supply only, not delivery. It is the central benchmark in any buying decision — see when utility supply wins.

Tariff and rate terms

Tariff. The schedule of rates, rules, and charges a utility files with and has approved by the ICC. It governs the delivery side of your bill. Explored in Illinois utility tariff structures explained.

Rate class (rate schedule). The category the utility assigns your account to, based on size, demand, and voltage. It determines which delivery charges, demand charges, and riders apply. Your rate class is printed on your bill.

Energy charge. The bill component for total kilowatt-hours (kWh) consumed over the period.

Demand charge. A charge based on your highest rate of use, measured in kilowatts (kW) over a short interval, rather than total energy. Two accounts with equal total consumption can pay very different demand charges depending on how concentrated their peaks are.

Ratchet. A tariff provision under which a demand charge is based partly on a past peak, so a single high-demand interval can keep raising your demand billing for months afterward. Ratchets reward steady, well-managed load.

Load factor. A measure of how evenly you use power — roughly, average demand relative to peak demand. A high load factor (steady use) generally makes demand-metered accounts more economical.

Rider. A tariff provision that adds or adjusts a specific charge, often to pass through a defined cost or fund a program. Riders vary by utility and rate class.

Rider T. The gas transportation rider arrangement (Ameren) under which large downstate commercial customers arrange their own gas supply while the utility transports it. Analogous transportation programs exist at other gas utilities for eligible commercial natural gas users.

Capacity and demand concepts

Capacity. A wholesale-market product ensuring enough generation is available to meet peak demand. Capacity costs flow into retail supply prices and are a major reason peak usage matters.

Capacity tag (PLC, Peak Load Contribution). A value assigned to your account representing your contribution to the system peak. It drives the capacity cost embedded in your supply price. Because it is set from your usage during specific peak periods, managing usage during those periods can influence your capacity tag in future periods.

Coincident peak. The moment of highest demand on the whole regional system. Your usage during coincident-peak intervals is what typically sets your capacity tag, which is why peak-alert strategies target those hours.

Peak shaving / load curtailment. Deliberately reducing usage during high-demand periods to lower demand charges or capacity obligations.

Contract structures and clauses

Fixed price. A supply contract that locks a set rate per kWh for the term, providing budget certainty but no participation if market prices fall.

Index (variable) price. A supply contract priced at or near the wholesale market, so the monthly cost moves with the market. It offers flexibility and potential upside when prices fall, but exposure when they spike.

Block-and-index. A hybrid where a fixed "block" of expected usage is locked at a known price while the remainder floats at index, blending budget certainty with market participation. See a worked treatment in block + index for manufacturers.

Bandwidth (swing). The range by which your actual usage may vary from the contracted baseline before the supplier reprices the difference. Tight bandwidth can penalize a business whose usage changes; wider bandwidth or full-requirements language reduces that risk.

Full requirements. Contract language under which the supplier serves all of your load at the agreed price regardless of volume changes, minimizing bandwidth risk.

Pass-through (change-in-law) clause. A provision letting the supplier pass certain cost changes — often regulatory or market-driven — through to you despite a fixed rate. Narrow, well-defined pass-through language protects the buyer.

Term. The length of the supply contract. Longer terms lock a price for longer but reduce flexibility.

Auto-renewal (evergreen) clause. A provision that automatically renews your contract, often onto a variable rate, unless you give notice within a specified window. Missing the window can be costly.

Holdover. The period, and pricing, that applies after a contract expires but before a new arrangement takes effect — frequently at a less favorable variable rate. Knowing your holdover terms prevents unpleasant surprises at expiration.

Early termination fee (ETF). A charge for ending a supply contract before its term ends. Structures vary from flat fees to market-based "liquidated damages," which can be large. Understand the ETF before signing.

A note on numbers

Wherever you see a specific rate, percentage, or auction figure quoted elsewhere, confirm it against a primary source: the utility, Plug In Illinois, the IPA, or the relevant market operator. Time-sensitive values change, and a wholesale auction number is never the same thing as your retail bill rate. For eligibility and enrollment mechanics, see how Illinois commercial electricity choice works.

Sources

• Plug In Illinois — official electric choice information
• Illinois Commerce Commission
• Illinois Power Agency
• PJM Interconnection

This glossary is educational and promises no particular savings. Definitions describe how the market and its contracts generally work; your specific terms, rate class, and pricing depend on your account and the offers available to you.