Understanding the Financial Implications of Switching from ComEd Default Service to an ARES

In the competitive landscape of Illinois business, managing operational costs is a constant challenge. Among these costs, electricity often ranks as one of the largest non-payroll expenses for commercial and industrial facilities. For decades, Northern Illinois businesses had little choice but to accept whatever rate was provided by Commonwealth Edison (ComEd). However, since the deregulation of the Illinois energy market, a massive shift has occurred, allowing businesses to choose their electricity provider.

This choice is between the ComEd default service and an Alternative Retail Electric Supplier (ARES). While the concept of choice is appealing, the financial implications of making the switch—or staying put—are complex. To make an informed decision, business owners, CFOs, and facility managers must understand the mechanics of ComEd vs ARES, the nuances of Illinois commercial electricity rates, and the potential pitfalls that can turn a "great deal" into a financial burden.

This comprehensive guide breaks down the financial realities of the Illinois energy market, providing you with the roadmap needed to navigate the ComEd Price to Compare commercial benchmark and secure the best ARES Illinois has to offer.

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Sources:

• Illinois Commerce Commission (ICC)
• Plug In Illinois - Official State Comparison Site
• Illinois Power Agency (IPA)
• PJM Interconnection

The ComEd Default Rate: Are You Unknowingly Overpaying for Business Electricity?

For many small to mid-sized businesses in the Chicagoland area, the default path is simply to let ComEd handle everything. This is known as "Default Service" or "Basic Electric Service." When you are on this service, ComEd doesn't actually make a profit on the electricity itself—they are legally required to pass through the cost of the power they buy on your behalf without a markup. However, the way they buy that power can lead to a lower ComEd business bill being missed entirely.

The Mechanism of the Price to Compare (PTC)

The ComEd Price to Compare commercial rate is set through a series of procurement auctions managed by the Illinois Power Agency (IPA). These auctions happen months or even years in advance. The IPA buys power in "tranches" to ensure that the utility has enough supply for all its default customers.

While this process is designed to prevent extreme price spikes, it has several inherent financial disadvantages for businesses:

1. The "Average" Penalty: Because the IPA is buying for millions of customers simultaneously, the rate is an average. It doesn't account for your specific "load shape"—the unique way your business uses power. If your business is more efficient than the average, you are effectively subsidizing less efficient users on the default rate.
2. Seasonal Volatility: The PTC changes twice a year (Summer and Non-Summer). This makes long-term budgeting difficult. A CFO trying to project costs for a 24-month project cannot rely on the PTC, as it will change at least four times during that period.
3. The Purchased Electricity Adjustment (PEA): This is perhaps the most frustrating component of the default rate. The PEA is a monthly adjustment—either a credit or a charge—that ensures ComEd breaks even on supply. It can fluctuate by up to 0.5 cents per kWh month-to-month. For a large manufacturer, a 0.5-cent swing can represent thousands of dollars in unplanned monthly expenses.

Why Default is Rarely Optimal

Staying on the default rate is essentially a "passive" energy strategy. In a market as liquid and competitive as PJM (the grid operator for Northern Illinois), being passive usually comes with a premium. By not actively seeking to switch from ComEd to ARES, businesses are leaving their energy costs to a state-managed auction process that prioritizes social stability over individual business optimization.

Furthermore, the default rate includes "Transmission Services Charges" that are often higher than what can be negotiated in the open market. When you look at your bill, the supply section is often the largest portion, and even a 5% difference between the PTC and an ARES rate can result in significant annual savings.

Learn more about decoding your ComEd bill here.

ARES Explained: How Alternative Suppliers Unlock Lower Commercial Energy Rates in Illinois

If ComEd is the "default" choice, an Alternative Retail Electric Supplier (ARES) is the "competitive" choice. But what exactly is an ARES, and how do they offer lower ComEd business bill options?

The Role of the ARES

An ARES is a company certified by the Illinois Commerce Commission to sell electricity to customers. They do not own the wires, poles, or transformers—ComEd still maintains all of that infrastructure. Instead, an ARES acts as a specialized "buyer" in the wholesale market.

Because an ARES is a private entity, they have flexibility that the Illinois Power Agency does not. They can:

• Buy power at specific times when the market is low.
• Offer customized contracts (12, 24, 36, or 48 months).
• Provide "hybrid" pricing models that combine fixed and market-based rates.
• Bundle value-added services like energy audits or demand response incentives.

How Competition Drives Down Rates

In a deregulated market, ARES companies compete fiercely for your business. This competition is what drives Illinois commercial electricity rates down for those who are willing to shop. When you request a quote from multiple suppliers, they aren't just looking at the market; they are looking at your specific usage data.

If your business has a "high load factor"—meaning you use a steady amount of power day and night—you are very attractive to an ARES. They can buy power for you more cheaply than they can for a "peaky" business like a restaurant that uses a lot of power only during lunch and dinner. On the ComEd default rate, both the steady manufacturer and the peaky restaurant might pay the same rate. With an ARES, the manufacturer can capture the financial benefit of their efficient usage.

The Power of Market Timing

One of the biggest advantages of working with the best ARES Illinois has available is the ability to time the market. The energy market is a commodity market, much like gold or oil. Prices fluctuate daily based on weather, natural gas storage levels, and geopolitical events.

An ARES allows you to "lock in" a rate when the market is at a low point. For example, if natural gas prices (which often set the price for electricity) drop significantly in the spring, a business can sign a contract in April to start in October. The ComEd default rate wouldn't reflect that market dip until much later, if at all.

See our guide on how to time your supply RFP.

The Bottom Line: A Step-by-Step Financial Breakdown of ComEd vs. ARES Pricing

To truly understand the financial implications, we need to look at the math. Let's compare a hypothetical medium-sized business (like a grocery store or a small fabrication shop) on the ComEd default rate versus a competitive ARES contract.

Sample Scenario: "Mid-West Manufacturing Co."

• Monthly Usage: 100,000 kWh
• Peak Demand: 250 kW
• Current Status: ComEd Default Service

Option A: Staying with ComEd Default (PTC)

For the sake of this example, let's assume the current ComEd Price to Compare commercial rate is 9.50 cents per kWh. This includes the supply charge and transmission.

• Monthly Supply Cost: 100,000 kWh * $0.095 = $9,500
• PEA Adjustment (Estimated): +$0.003 (Charge) = $300
• Total Monthly Supply Spend: $9,800
• Annual Projection: $117,600

Option B: Switching to an ARES Fixed Rate

After a competitive bidding process, Mid-West Manufacturing Co. finds a 24-month fixed rate at 8.70 cents per kWh, all-in (including supply and transmission).

• Monthly Supply Cost: 100,000 kWh * $0.087 = $8,700
• PEA Adjustment: $0.00 (ARES contracts do not have a PEA)
• Total Monthly Supply Spend: $8,700
• Annual Projection: $104,400

The Financial Impact

• Monthly Savings: $1,100
• Annual Savings: $13,200
• Total Contract Savings (24 Months): $26,400

For many businesses, this $26,000 isn't just "savings"—it's the cost of a new piece of equipment, a part-time hire, or a significant boost to the net profit margin.

Comparing "Apples to Apples"

The biggest mistake businesses make when comparing ComEd vs ARES is failing to ensure they are looking at the same components. A "supply-only" quote from an ARES might look incredibly low (e.g., 6.50 cents), but if it doesn't include transmission or capacity, it will actually be more expensive than the ComEd PTC.

Component	ComEd PTC (Default)	ARES Fixed Rate	ARES Index (Market)
Energy	IPA Auction Based	Fixed for Term	Changes Hourly/Daily
Transmission	Regulated Pass-through	Usually Fixed	Usually Pass-through
Capacity	Included in Rate	Fixed or Pass-through	Pass-through
PEA	Yes (Volatile)	No	No
Term	6 Months	12-48 Months	Month-to-Month

Read more about the differences between Fixed and Index rates.

Making the Switch: 5 Hidden Fees & Contract Traps to Avoid for Maximum Savings

While the potential for savings is high, the ARES market is not without its risks. To secure a lower ComEd business bill, you must be able to spot the traps in a supplier's contract. Not all suppliers are created equal, and the "cheapest" rate on paper can often become the most expensive in practice.

1. The "Teaser Rate" Trap

Some suppliers offer a very low rate for the first 3 months of a contract, only for it to skyrocket to a "variable" rate thereafter. These are often marketed to small businesses as a way to "save 20% immediately."

• The Financial Risk: After the initial period, your rate could jump from 8.00 cents to 14.00 cents.
• How to Avoid: Always insist on a "Fixed Rate for the Full Term." If the contract says "variable" or "market-based" after a certain date, keep looking.

2. Bandwidth (Usage) Clauses

In the energy world, "Bandwidth" refers to how much your usage can vary from your historical average. Many ARES contracts include a "10% bandwidth clause." If you use 11% more (or less) electricity than expected, the supplier can charge you the market rate for the difference.

• The Financial Risk: If you add a second shift or buy new machinery, your energy costs could spike unexpectedly.
• How to Avoid: For most businesses, you should look for "100% Bandwidth" or "Full Requirements" contracts. These ensure your rate stays the same regardless of how much power you use.

3. Capacity Pass-Throughs

Capacity is a charge paid to ensure there is enough power on the grid during peak times. In some ARES contracts, this is a "pass-through" item, meaning the supplier charges you whatever the market rate is at that time.

• The Financial Risk: Capacity prices in the PJM market have been extremely volatile recently. A pass-through contract could lead to a "bill shock" if capacity prices spike.
• How to Avoid: Ask the supplier if the rate is "All-In" or "Capacity Pass-Through." If you are risk-averse, go with "All-In."

Understand how your Capacity Tag (PLC) is set.

4. Early Termination Fees (ETF)

Unlike the ComEd default service, which you can leave at any time, ARES contracts are legally binding for the term. If you want to switch suppliers or go back to ComEd before the contract is up, you will likely face an ETF.

• The Financial Risk: These fees can be calculated as the "liquidated damages"—essentially the remaining value of the contract. For a large business, this could be tens of thousands of dollars.
• How to Avoid: Only sign a contract for a term you are comfortable with. If you plan on selling the building or closing the business, look for a "Regulatory Out" or "Moving Clause" in the contract.

5. Automatic Renewals

Some older ARES contracts include a clause that automatically renews you for another year if you don't cancel within 30 or 60 days of the expiration. These "evergreen" rates are almost always significantly higher than the market rate.

• The Financial Risk: You could be rolled into a rate that is 2-3 cents higher than the ComEd PTC without even knowing it.
• How to Avoid: Mark your contract expiration date on your calendar. Work with a broker who provides "Renewal Alerts" to ensure you are always shopping the market before your current deal ends.

Industry-Specific Implications: Who Benefits Most from Switching?

The financial impact of moving from ComEd vs ARES varies depending on your industry. Certain sectors are "natural winners" in the deregulated market.

Manufacturing & Industrial

Manufacturers often have the most to gain. Because they use a lot of power and usually have predictable schedules, they can negotiate the most competitive rates. Furthermore, many manufacturers can benefit from "Block & Index" strategies—fixing the price for their "base load" and paying market rates for their "peak load."

Data Centers

For data centers, energy is often the #1 operating cost. These facilities require 100% "uptime" and use massive amounts of electricity for cooling. Data centers almost always use an ARES because they need specialized products like "Carbon-Free Energy" to meet corporate sustainability goals—something the ComEd PTC cannot provide.

Retail & Multi-Site Commercial

For businesses with multiple locations (like a chain of dry cleaners or restaurants), managing dozens of individual ComEd bills is a nightmare. An ARES can "aggregate" all these locations into a single contract with a single expiration date and a uniform rate. This reduces administrative overhead and provides better buying power.

How to choose an energy broker for multi-site firms.

The Role of an Energy Broker in the Illinois Market

Navigating the transition from switch from ComEd to ARES can be overwhelming. This is where an energy broker or consultant becomes a vital financial partner. A broker doesn't work for the utility or the supplier; they work for you.

Why Use a Broker?

1. Access to More Suppliers: Most businesses only know the "big name" suppliers. A broker has relationships with dozens of ARES companies, including "niche" players that might have the best rates for your specific industry.
2. Apples-to-Apples Analysis: A broker will take the complex, jargon-heavy quotes from multiple suppliers and put them into a simple spreadsheet. They ensure that every quote includes the same components (transmission, capacity, taxes).
3. No Cost to the Business: In most cases, the broker is paid a small commission by the supplier. This means you get expert advice and market access without an upfront fee.
4. Ongoing Monitoring: The best brokers don't just sign you up and disappear. They monitor the market daily and will tell you when it's time to "blend and extend" your contract to capture a new market low.

Learn how to choose an energy broker in Illinois.

Conclusion: Strategic Energy Procurement as a Competitive Advantage

Understanding the financial implications of the ComEd vs ARES choice is about more than just finding a lower number on a bill. It's about taking control of a major operational expense and turning it into a strategic advantage.

By staying on the ComEd default service, you are accepting a "one-size-fits-all" rate that is subject to seasonal changes and monthly adjustments. By switching to the best ARES Illinois has to offer, you can secure long-term budget certainty, capture market lows, and avoid the "average" penalty of the utility rate.

However, as we've explored, the path to savings requires diligence. Avoiding teaser rates, understanding bandwidth clauses, and managing your capacity tag are all essential steps in the process.

Whether you are a small business owner looking for a lower ComEd business bill or a facility manager at a large industrial plant, the time to evaluate your options is now. The Illinois energy market is more competitive than ever, and those who take an active approach to their energy procurement will always come out ahead of those who simply stay on the "default" path.

Final Checklist for Illinois Businesses

• Review your current bill: Are you on "Basic Electric Service" or with a supplier?
• Find your PTC: Check the latest ComEd Price to Compare commercial rate for your rate class.
• Gather your data: You'll need 12 months of usage history (or your ComEd account number) to get an accurate quote.
• Request a "Full Requirements" quote: Ensure it includes energy, transmission, and capacity.
• Check for traps: Look closely at the bandwidth clauses and termination fees.
• Consult an expert: Reach out to an independent energy advisor to ensure you're getting the best possible deal.

Don't let your energy budget be a "default" decision. Take control, shop the market, and start saving today.

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Frequently Asked Questions (Deep Dive)

Q: Is it "safer" to stay with ComEd? A: In terms of reliability, it's identical. ComEd is still responsible for the lines and the delivery. In terms of price, the ComEd default rate is actually less safe because it is volatile and subject to monthly adjustments (PEA) that can spike your bill without warning.

Q: Can I switch back to ComEd if I don't like my ARES? A: Yes, but you must check your contract for an Early Termination Fee. Once your contract term is over, you can always return to ComEd default service or choose a different ARES.

Q: Does switching to an ARES help me meet ESG goals? A: Yes. Most ARES companies offer "Green Power" products that use Renewable Energy Certificates (RECs) to match your usage. ComEd's default supply is a mix of whatever is on the grid (including nuclear and natural gas).

Q: How long does the switch take? A: Generally, it takes 1 to 2 billing cycles for the switch to take effect. There is no interruption in service during the transition.

Q: What is the "Non-Summer" vs "Summer" rate? A: ComEd defines Summer as June through September. Rates are typically higher during these months because demand for air conditioning is high. The "Non-Summer" rate applies from October through May. An ARES can offer a "Flat Rate" that stays the same all 12 months, which is much easier for budgeting.