What Is the Illinois Power Agency (IPA) Default Service and Is It Costing Your Business Money?

Most Illinois business owners have heard of ComEd. Fewer have heard of the Illinois Power Agency — even though it's the organization that has been setting the supply rate on their electric bill since 2007. If your business is on ComEd or Ameren Illinois default service and you've never switched to a competitive supplier, the IPA is the entity determining what you pay for electricity supply every month.

Understanding how the IPA works, how the default service rate is set, and what it actually costs relative to the competitive market is essential knowledge for any Illinois business owner trying to manage energy expenses intelligently. This guide breaks it all down: what the IPA is, how much its default service really costs your business, how it compares to competitive supplier alternatives, and how to switch if the numbers make sense.

What Is the Illinois Power Agency (IPA) Default Service? Everything Illinois Businesses Need to Know

The Illinois Power Agency was established in 2007 under the Illinois Power Agency Act with a specific mandate: to procure electricity and renewable energy resources on behalf of customers served by ComEd and Ameren Illinois who have not chosen an alternative retail electric supplier.

In plain terms, the IPA is the default electricity buyer for the state's utility customers. It doesn't own power plants or transmission lines — it's a procurement agency. It runs competitive auctions, selects supply contracts with generators and wholesale suppliers, and passes the resulting blended cost to customers as the Price to Compare (PTC).

Why the IPA Exists

When Illinois deregulated its energy market in 1997, regulators anticipated that most customers would eventually choose competitive suppliers. That vision has only partially materialized. While large commercial and industrial accounts routinely shop the competitive market, a significant portion of small businesses and residential customers have never switched. The IPA exists to ensure these customers receive a reasonably competitive, independently procured supply rate rather than being left to whatever the incumbent utility would charge if it controlled both supply and delivery.

The IPA's procurement process is genuinely designed to be transparent and competitive. It uses independent consultants, public reporting, and multi-supplier auctions to keep costs in check. But "transparent and reasonably competitive" is not the same as "optimized for your specific business."

How the IPA Sets the Price to Compare

The IPA conducts procurement events throughout the year, securing forward supply contracts with multiple suppliers at competitive wholesale prices. These contracts cover different periods (monthly, quarterly, seasonal) and span multiple years, meaning the PTC at any given time reflects a weighted average of several contract vintages from different market conditions.

The PTC is updated periodically (at least annually for most rate schedules) and is published by ComEd and Ameren Illinois on their websites. It represents the supply-only cost per kWh — the portion of your bill that covers the actual electricity commodity, separate from delivery charges.

What the PTC does NOT include:

• Distribution charges (poles, wires, transformers)
• Transmission charges (high-voltage grid)
• Capacity charges (from PJM or MISO auctions)
• Riders and surcharges (state-mandated programs)

These delivery-side components are the same whether you're on default service or with a competitive supplier.

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How Much Is IPA Default Service Really Costing Your Illinois Business Every Month?

This is the question that matters. The answer isn't a single number — it depends on your utility territory, rate schedule, usage pattern, and the current market environment. Let's break it down with real numbers.

ComEd PTC: What Small Businesses Pay for Default Supply

For ComEd small commercial accounts (typically served under BES or similar schedules), the non-summer 2025–2026 PTC is approximately $0.0966/kWh. The summer rate is modestly higher at around $0.1027/kWh.

At these rates, here's what the annual supply cost looks like for businesses of different sizes:

Monthly Usage	Annual kWh	Annual Supply Cost (@ $0.0966 non-summer blended)
3,000 kWh/mo	36,000	~$3,478
7,000 kWh/mo	84,000	~$8,114
15,000 kWh/mo	180,000	~$17,388
30,000 kWh/mo	360,000	~$34,776
80,000 kWh/mo	960,000	~$92,736

These are supply costs only. Add delivery charges, and total bills are considerably higher.

The Hidden Cost of Default Service: Timing Risk

The IPA's procurement model creates a subtle but real risk: the PTC reflects historical contracted rates, not the current spot market. This can work in your favor (if wholesale prices spike, your IPA rate from prior contracts may be below the spot market) or against you (if wholesale prices fall, competitive ARES suppliers can beat the PTC while your default service rate remains elevated from older contracts).

In practice, the IPA's multi-vintage procurement creates a moderate degree of price smoothing. But it also means the PTC may persistently lag favorable market conditions, leaving savings opportunities on the table for businesses that don't proactively shop.

The Capacity Charge Effect on Default Accounts

One component that deserves specific attention is capacity charges — the cost of ensuring grid reliability through PJM and MISO capacity markets. For ComEd customers, capacity costs are tied to the PJM Base Residual Auction (BRA).

The 2026/2027 BRA cleared at $329.17/MW-day, an unprecedented level driven by data center load growth, generator retirements, and tightening reserve margins. This capacity cost is built into both IPA default supply rates and ARES supplier pricing — neither is immune. However, ARES suppliers who locked in all-in fixed rates before auction results became public may be offering better total pricing than the IPA's updated PTC, which must reflect the new capacity reality.

For a business with 500 kW of peak demand, the annual capacity cost at $329.17/MW-day is approximately $60,000 — a significant line item. While this can't be avoided by switching suppliers, it can be partially managed through demand response, peak shaving, and capacity tag reduction strategies. See peak shaving 101: reducing capacity tags in ComEd for more.

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IPA Default Service vs. Competitive Energy Suppliers: Which Option Saves Illinois Businesses More Money?

Let's put the comparison in concrete terms. A small manufacturing business in Schaumburg consumes 25,000 kWh/month (300,000 kWh/year). They are currently on ComEd BES default service.

Option 1: Stay on IPA Default Service

Annual supply cost at blended PTC ($0.098/kWh): $29,400

The IPA continues to procure supply on their behalf. Rates adjust periodically based on procurement results. No contract to manage, no commitment required.

Option 2: Switch to ARES Fixed Rate

Two ARES suppliers quote the following all-in fixed rates for a 24-month contract:

Supplier	Rate (¢/kWh)	Annual Cost	vs. IPA PTC	2-Year Savings
ComEd Default (IPA)	9.80	$29,400	Baseline	—
Supplier A (all-in, 24-mo)	9.15	$27,450	Save $1,950/yr	$3,900
Supplier B (all-in, 24-mo)	8.95	$26,850	Save $2,550/yr	$5,100
Supplier C (index-based)	Varies ~8.80–10.20	~$27,000 avg	Variable	~$4,800 est.

In this scenario, switching to Supplier B generates approximately $5,100 in savings over 24 months with zero operational change. The risk is the ETF if circumstances require early exit — typically $1,500–$3,000 for this size of account, well below the savings.

When IPA Default Service Is the Better Choice

The IPA isn't always the losing option. There are legitimate scenarios where default service outperforms the competitive market:

• Very spiky demand: Businesses whose demand profile is difficult to predict may face tight bandwidth restrictions with ARES contracts that reduce the net savings.
• Likely business closure or relocation within 12 months: The ETF risk from a fixed-term contract may outweigh supply savings.
• Market price spikes at time of procurement: If you're forced to shop during an elevated price period (e.g., right after a major capacity auction or winter weather event), the market may not beat the IPA's multi-vintage blended rate.
• Already locked into a competitive contract: If you recently signed a contract through an ARES, you're already off IPA default service by definition.

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How to Switch Away from IPA Default Service and Start Saving on Your Illinois Business Energy Bills Today

The switching process from IPA default service to a competitive ARES supplier is simple and carries no interruption risk. Here's the complete process:

Step 1: Gather Your Usage Data

Collect 12–24 months of ComEd bills or request Green Button data export. Note your average monthly kWh, peak demand (kW), and current supply rate.

Step 2: Verify Your Rate Schedule

Confirm which ComEd rate schedule you're on (BES, BESH, DS, etc.). Your broker can help identify this from your account number.

Step 3: Request Competitive Quotes

Work with a licensed Illinois commercial energy broker or contact 3–5 ARES suppliers directly. Provide usage data and request all-in fixed-rate quotes for 12- and 24-month terms.

Step 4: Compare to Current PTC

Calculate the projected savings: (IPA PTC rate – ARES rate) × annual kWh = annual savings. Factor in ETF risk and bandwidth restrictions.

Step 5: Execute and Enroll

Sign the ARES contract. The supplier submits enrollment to ComEd. You receive a confirmation. The switch takes effect at the next meter read date — typically 30–60 days out.

Step 6: Monitor Your Bill

Verify that your first post-switch bill reflects the contracted ARES rate. Set a renewal alert 90 days before contract expiration.

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Conclusion: Know What You're Paying Before Assuming It's Fine

The Illinois Power Agency does a credible job procuring electricity for the customers who rely on it. But the default service is not designed to deliver maximum savings for any individual business — it's designed to deliver an acceptable rate for a large, diverse pool of customers.

Your business is not average. Your load profile, risk tolerance, and budget needs are specific to your operation. The competitive ARES market exists precisely to serve those specific needs with targeted pricing, flexible contract structures, and the kind of customized engagement that a state procurement agency simply cannot provide.

If you haven't compared the competitive market to your current IPA default rate in the past 12 months, there's a real possibility you're overpaying. The cost to check is zero. The potential savings are real.

Contact illinoiscommercialenergy.com for a free IPA benchmark analysis. We'll compare your current default service rate to competitive ARES offers in your territory and give you a clear, honest assessment of whether switching makes financial sense for your business right now.

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Sources:

• Illinois Power Agency – About the IPA
• Illinois Power Agency Act – 20 ILCS 3855
• ComEd – Price to Compare Information
• Illinois Commerce Commission – Consumer Protection and Retail Market Oversight
• PJM Interconnection – Capacity Market Auction Results

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