Natural Gas Procurement for Chicago-Area Businesses

Natural gas procurement in Illinois starts with utility and eligibility. The Illinois Commerce Commission says residential and small commercial customers of Nicor Gas, North Shore Gas, and Peoples Gas can currently choose an ICC-certified Alternative Gas Supplier. The ICC also says these natural gas choice programs are not currently available in Ameren Illinois territories or other gas utility territories for that customer group.

Verify the current rule in the ICC Natural Gas Choice FAQ. Larger transportation customers can have different tariff pathways, so do not infer their options from the small-commercial FAQ.

Understand the three bill layers

The ICC's natural gas consumer education page describes delivery, gas supply, and taxes. The local utility continues safe delivery and emergency response when an eligible customer selects an AGS.

Utility supply uses a Purchased Gas Adjustment mechanism. The PGA can change monthly and includes anticipated gas costs plus true-ups for prior over- or under-recovery. The ICC publishes Purchased Gas Adjustment rates, but the applicable benchmark must match the utility and month.

An AGS price is set by contract and is not regulated as a utility supply rate. Check the ICC Alternative Gas Supplier resources and utility registration before signing.

Small-commercial eligibility

The ICC glossary defines a small commercial customer for this choice framework as a non-residential customer that used 5,000 or fewer therms during the previous year, with aggregation rules for meters and premises. Confirm current eligibility with the utility; do not divide accounts to manufacture eligibility.

Collect the procurement dataset

• 24 to 36 months of billed therms when available;
• meter and account inventory;
• utility and service class;
• daily or monthly usage data available under the tariff;
• current supplier contract and end date;
• firm or interruptible service terms;
• peak-day or maximum daily quantity obligations if applicable;
• expected facility or process changes;
• tax status and billing requirements.

Weather-normalize heating load only with a documented method. Industrial process gas should not be modeled as though it moves one-for-one with heating degree days.

Compare contract structures

Fixed price: budget certainty for covered components, subject to exclusions and volume terms.

Index price: follows a stated market index plus basis, transport, storage, and supplier adder. The contract must name the index publication, location, timing, and fallback.

Layered or block strategy: fixes portions over time and leaves a defined balance exposed. Requires governance and load forecasting.

For each offer, identify commodity, basis, pipeline transport, storage, balancing, utility choice charges or credits, taxes, monthly fees, and broker compensation. A fixed commodity number can still exclude material delivery-to-city-gate costs.

Volume and operational risks

Review swing tolerance, imbalance charges, nominations, force majeure, operational-flow orders, meter additions, assignment, and early termination. A low fixed price with narrow volume tolerance can be unsuitable for a weather-sensitive or growing facility.

Utility supply comparison

Do not compare one future fixed AGS price against a single historical PGA month. Build a scenario using the delivery period and acknowledge that future PGA rates are unknown. Show the value of budget stability separately from expected cost.

Safety is never a supplier question

The local gas utility remains the emergency contact for a suspected leak or service problem. Leave the area and follow the utility's emergency instructions. Do not contact a broker first.

Decision record

The approval memo should state eligibility, utility, usage data period, benchmark method, charge inclusions, volume assumptions, stress case, supplier status check, contract notice dates, and unresolved risks. Never promise a generic percentage saving from switching suppliers.

Know the territory before anything else

In Chicagoland, the first fact to establish is which gas utility serves the meter, because it determines whether competitive supply is even an option. Peoples Gas serves the City of Chicago; Nicor Gas serves most of the suburbs; North Shore Gas serves a set of Lake County and far-north communities. Each offers a commercial supplier-choice program while continuing to deliver the gas and handle emergencies. Downstate, Ameren Illinois gas territory works differently — there is no standard small-commercial supplier-choice program, only Rider T transportation for qualifying larger accounts — so advice that applies in Chicago does not transfer to an Ameren site. Confirm the utility from a recent bill, since some communities sit on a boundary. See commercial natural gas in Illinois and how commercial natural gas choice works for the statewide picture.

Why seasonality drives the gas decision

Commercial gas load is usually concentrated in winter, so the shape of a year's usage matters as much as the total. A fixed price gives budget certainty across a heating season but is only as suitable as its swing tolerance: a narrow band on a weather-sensitive building can turn an attractive headline price into an expensive one when a cold snap pushes usage outside the tolerance. That is why a full twelve months of therm history — not a single month — is the minimum input, and why the volume and imbalance terms deserve as much attention as the per-therm number. For a business with both electric and gas load, aligning the two renewal calendars keeps the account reviewed once a year rather than twice.

Keep the comparison honest

The most common gas-procurement error is comparing a future fixed supplier price against one historical utility purchased-gas-cost (PGA) month and calling the difference savings. The PGA adjusts over time and its future values are unknown, so the fair comparison uses the actual delivery period and treats budget stability as a separate value from expected cost. As with electricity, no generic percentage saving from switching should be promised — the decision is a deliberate, correctly-scoped choice for the specific account and territory, folded into the wider procurement process.

Source check date: July 19, 2026. Eligibility and PGA rates can change.