Illinois Energy Deregulation: Timeline and History

Understanding how Illinois arrived at today's competitive commercial energy market helps explain why bills are structured the way they are and why "choosing a supplier" is even a thing. This is a factual overview of the milestones, told in terms of the structures they created rather than specific figures that change over time.

The starting point: bundled, regulated service

For most of the twentieth century, an Illinois business had no supplier to choose. A single regulated utility provided everything — it generated or bought the electricity, delivered it over its own wires, and billed a single bundled rate approved by the state. The utility held a monopoly, and in exchange, regulators controlled its rates and required it to serve everyone in its territory. This model applied to both the northern utility that became ComEd and the central and southern utilities that consolidated into Ameren Illinois.

That arrangement was stable but offered customers no competitive alternative. Nationwide, policymakers began asking whether the supply of electricity — as opposed to its delivery — really needed to be a monopoly. Delivery is a natural monopoly because duplicating power lines is wasteful. Generation and supply, the argument went, could be competitive.

1997: the Customer Choice law

The pivotal moment for Illinois was the Electric Service Customer Choice and Rate Relief Law, enacted in 1997. It established the framework the state still uses today. Its central move was to unbundle supply from delivery:

• Delivery stayed a regulated monopoly, with the local utility continuing to own the wires and the Illinois Commerce Commission approving its rates.
• Supply was opened to competition, allowing licensed alternative retail electric suppliers (ARES) to sell the commodity to customers who chose to shop.

Crucially, the law phased in eligibility rather than flipping a switch for everyone at once. Larger commercial and industrial customers generally gained the ability to choose a competitive supplier before smaller commercial and residential customers did. This staged approach let the market, the utilities, and the regulator adjust as competition expanded. For the mechanics of how eligibility and enrollment work now, see how Illinois commercial electricity choice works.

Building the competitive infrastructure

Opening a market requires more than passing a law. Several structural pieces had to fall into place, and they define how procurement works today.

Licensing and oversight

The competitive market only functions if customers can trust that suppliers are legitimate and financially sound. The ICC took on the job of licensing ARES suppliers, enforcing consumer protections, and handling complaints. To this day, verifying a supplier's license through the state's official list at plugin.illinois.gov and the ICC is the first thing any business should do before signing a supply contract.

A benchmark for default service

Not every customer wants to shop, and those who do not still need supply. The utility continues to provide default service to customers who never sign a competitive contract. The price of that default supply became the natural benchmark — the price to compare — against which any competitive offer is measured. Our guide to the price to compare and when utility supply wins explains how to use it.

The Illinois Power Agency

To manage how default supply is procured, Illinois later created the Illinois Power Agency (IPA). Rather than leaving each utility to buy default power on its own, the IPA procures electric supply on behalf of eligible customers through a structured process. The results of that procurement help establish the price to compare. The IPA's role is procurement and planning; the ICC's role remains regulation and oversight. Both are essential, and they are not the same body — a distinction worth keeping straight. The agency publishes its plans and procurement information at ipa.illinois.gov.

Natural gas followed a parallel path

Electricity is the headline story, but Illinois also developed customer choice for natural gas supply. The structure mirrors electricity: eligible commercial customers can buy the gas commodity from a competitive supplier while the local gas utility continues to deliver it and maintain the pipes. The delivery utilities differ by region — Peoples Gas serves Chicago, Nicor Gas serves much of northern Illinois outside the city, North Shore Gas serves the far-north and Lake County area, and Ameren serves downstate gas customers, where large commercial users may take supply through a transportation arrangement. The commercial natural gas side of the market rewards the same disciplined comparison as electricity.

Wholesale markets underpin everything

One structural fact shapes retail prices even though customers never interact with it directly: Illinois utilities operate within regional wholesale markets. ComEd's region sits within PJM Interconnection, and Ameren's region sits within MISO. These markets run the wholesale energy and capacity auctions that ultimately influence retail supply costs.

An important caution follows from this: a wholesale auction clearing price is not a retail bill rate. News coverage of PJM or MISO capacity auction results describes wholesale outcomes that feed into retail prices through several steps and time lags. Treating an auction number as your per-kilowatt-hour rate is a mistake. The primary sources for these markets are pjm.com and misoenergy.org.

Where things stand today

The framework built after 1997 is the one Illinois commercial customers still operate in:

• Delivery remains a regulated monopoly under ComEd, Ameren, or a municipal utility.
• Supply is competitive for eligible ComEd and Ameren customers, who may choose a licensed ARES or stay on default service.
• The ICC regulates and licenses; the IPA procures default supply and anchors the price to compare.
• Municipal customers (for example, Naperville and Springfield) are served by their municipal systems and do not have ARES choice.

For a deeper look at how the pieces fit together right now, see the Illinois deregulated energy market explained and our commercial energy procurement resources.

Sources

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

This history is educational and promises no particular savings. Specific dates, rates, and figures change over time; always confirm current details with the primary state sources cited above.