The Ultimate Guide to Understanding Your First Deregulated Energy Bill

Receiving your first energy bill after switching to an alternative supplier in Illinois can be a confusing experience. Suddenly, you're looking at a document that seems twice as complicated as before, with charges from multiple entities and terminology that reads like a foreign language. If you've ever stared at your ComEd or Ameren bill wondering who is charging you for what—and whether you're actually saving money—you're not alone.

This comprehensive guide will demystify every line item on your deregulated energy bill, help you identify potential overcharges, and provide actionable strategies to optimize your commercial energy costs. Whether you're a small business owner in Chicago or managing a manufacturing facility in downstate Illinois, understanding your bill is the first step toward taking control of your energy expenses.

Decoding Your Bill: Who is ComEd/Ameren and Who Is Your New Supplier?

The fundamental shift that occurs when you switch to an alternative energy supplier in Illinois is the separation of your energy service into two distinct components: supply and delivery. Understanding this split is essential to making sense of your bill.

The Role of Your Utility Company (ComEd or Ameren)

Even after you switch to an alternative supplier, ComEd or Ameren remains your utility company. They continue to be responsible for:

• Delivering electricity through the poles, wires, and infrastructure to your business
• Maintaining the grid and responding to power outages
• Reading your meter and tracking your monthly usage
• Sending you a consolidated bill that includes both their charges and your supplier's charges
• Providing emergency response when there are power interruptions

Think of the utility as the highway system—they own and maintain the roads that electricity travels on. Regardless of who generates your electricity, it still flows through their infrastructure to reach your business.

The Role of Your Alternative Energy Supplier

Your alternative energy supplier, also known as a Retail Electric Supplier (RES) in Illinois, handles the generation or procurement of the actual electricity you consume. They are responsible for:

• Sourcing or generating electricity that enters the grid on your behalf
• Setting your supply rate (the price per kilowatt-hour you pay for energy)
• Managing your energy contract terms and conditions
• Providing customer service related to your supply agreement

Using our highway analogy, your supplier is the trucking company delivering goods—they're responsible for the product itself, while the utility maintains the roads.

How This Appears on Your Bill

In Illinois, most customers receive a single consolidated bill from their utility company. This bill will clearly separate charges into distinct sections. You'll typically see:

• Delivery Services (from ComEd or Ameren) — These charges remain the same regardless of your supplier
• Supply Services (from your alternative supplier) — This is where your contracted rate appears
• Taxes and Fees — Various government-mandated charges

Some alternative suppliers may send a separate bill for their supply charges, though this is less common in Illinois. Always confirm with your supplier how billing will be handled when you sign up.

From kWh to Delivery Fees: A Line-by-Line Breakdown of Your Commercial Energy Charges

Now let's dissect the specific line items you'll encounter on your commercial energy bill. Understanding each charge helps you identify where your money goes and where potential savings opportunities exist.

Supply Charges

This section represents the cost of the actual electricity you consumed. Key components include:

Energy Charge ($/kWh): This is the core rate you negotiated with your supplier, multiplied by your total kilowatt-hour usage. For example, if your rate is $0.065 per kWh and you used 50,000 kWh, your energy charge would be $3,250.

Capacity Charges: Many commercial contracts include capacity charges based on your peak demand during specific intervals. These charges help cover the cost of maintaining enough generation capacity to meet demand during peak periods. According to the U.S. Energy Information Administration, capacity costs can represent a significant portion of commercial electricity expenses.

Transmission Charges: These cover the cost of moving electricity across the high-voltage transmission network from generation sources to local distribution systems.

Delivery Charges

These are the charges from your utility for maintaining and operating the local distribution network:

Customer Charge: A fixed monthly fee that covers the cost of maintaining your account, metering equipment, and basic service infrastructure. Commercial customers typically pay higher customer charges than residential customers due to more complex metering and service requirements.

Distribution Delivery Charge: Based on your usage, this covers the cost of local distribution infrastructure—the transformers, substations, and local power lines that bring electricity from the transmission system to your business.

Standard Metering Service: The cost of reading your meter and processing your usage data. Commercial accounts with demand metering may see higher charges in this category.

Environmental Cost Recovery: Charges that fund utility investments in renewable energy, energy efficiency programs, and environmental compliance.

Demand Charges (Critical for Commercial Customers)

One of the most significant—and often misunderstood—components of commercial energy bills is demand charges. While residential customers primarily pay for energy (kWh), commercial customers also pay for their peak power draw (kW).

Demand charges are calculated based on your highest 15-minute or 30-minute average power consumption during the billing period. If your business has equipment that creates sudden spikes in electrical usage—such as industrial motors, large HVAC systems, or manufacturing equipment—you could be paying substantial demand charges even if your overall energy consumption is modest.

For a deeper understanding of how demand charges work and strategies to reduce them, see our guide on understanding peak demand charges.

Taxes and Government-Mandated Charges

The final section of your bill includes various taxes and fees:

• State Electricity Excise Tax: Illinois imposes a state tax on electricity sales
• Municipal Utility Tax: Many Illinois municipalities add their own utility taxes
• Franchise Fee: Fees paid by utilities to municipalities for use of public rights-of-way
• Renewable Energy Charges: Contributions to state renewable energy programs
• Energy Efficiency Charges: Funding for utility energy efficiency programs

Are You Overpaying? 3 Hidden Fees on Your Deregulated Bill to Watch For

While competitive energy markets can offer significant savings, they also create opportunities for less scrupulous suppliers to embed hidden charges in your contract. Here are three common pitfalls to watch for:

1. Variable Rate Escalation Clauses

Some contracts that start with an attractive introductory rate include provisions allowing the supplier to increase your rate after an initial period—sometimes without clear notification. These escalation clauses can transform what seemed like a great deal into an expensive mistake.

What to look for: Review your contract for any language about rate adjustments, "market-rate pricing" after a fixed period, or seasonal rate variations. If you're currently under such a contract, check your bills to see if your rate has changed from what you originally signed.

Protection strategy: When shopping for energy, prioritize true fixed-rate contracts that lock in your price for the entire term. Be wary of contracts with asterisks or footnotes near the rate quote.

2. Pass-Through Charges Without Caps

Many commercial energy contracts include "pass-through" provisions that allow suppliers to add charges for capacity costs, transmission costs, or regulatory changes that weren't anticipated when the contract was signed. While some pass-through provisions are reasonable, uncapped pass-throughs can dramatically increase your effective rate.

What to look for: Examine your bill for line items labeled as "capacity adjustment," "transmission adjustment," "regulatory charge," or similar terms that weren't clearly explained in your original rate quote. The PJM Interconnection, which manages the grid serving Illinois, publishes capacity prices that can fluctuate significantly year over year.

Protection strategy: When comparing energy offers, ask specifically about pass-through charges and whether they're included in or excluded from the quoted rate. Seek contracts with "all-in" pricing that includes these costs.

3. Early Termination Fees Hiding in the Fine Print

Early termination fees (ETFs) can trap you in an unfavorable contract even when better options become available. Some contracts include punitive termination fees that effectively eliminate any chance of switching during the contract term.

What to look for: Review your contract's termination provisions carefully. Some contracts calculate ETFs as a flat fee, while others base the penalty on your remaining contract term multiplied by estimated usage—potentially resulting in thousands or tens of thousands of dollars for larger commercial accounts.

Protection strategy: Before signing any contract, understand exactly how termination fees are calculated. Consider whether the potential savings justify being locked into a long-term agreement. For more guidance on evaluating these fees, read our article on early termination fees explained.

Beyond the Bill: Proactive Steps to Lower Your Illinois Commercial Energy Costs

Understanding your bill is just the beginning. Here are actionable strategies to reduce your commercial energy costs in Illinois:

1. Conduct a Comprehensive Energy Audit

Before focusing solely on your supply rate, ensure you're not wasting the energy you're paying for. A professional energy audit can identify inefficiencies in your lighting, HVAC, compressed air systems, and production processes. The U.S. Department of Energy's Better Buildings program offers resources and case studies demonstrating how commercial facilities have achieved significant savings through efficiency improvements.

Common findings from commercial energy audits include:

• Outdated lighting systems that can be replaced with LED technology
• HVAC equipment operating inefficiently or running during unoccupied hours
• Air compressor systems with significant leaks
• Power factor issues resulting in higher-than-necessary utility charges

2. Implement Demand Management Strategies

Since demand charges can represent 30% to 70% of a commercial electricity bill, managing your peak demand offers substantial savings potential. Consider:

• Load staggering: Avoid starting multiple large equipment pieces simultaneously
• Peak demand alerts: Implement monitoring systems that warn when you're approaching peak levels
• Demand response programs: Participate in utility programs that pay you to reduce consumption during grid emergencies
• Energy storage: Install battery systems to shave peak demand

3. Shop Your Energy Contract Strategically

The deregulated energy market gives you the power to choose your supplier—use it wisely. Best practices include:

• Start shopping early: Begin evaluating options 4-6 months before your current contract expires
• Compare multiple suppliers: Request quotes from at least 3-5 suppliers to understand the market
• Consider contract length: Longer terms often provide better rates but reduce flexibility
• Evaluate total cost: Look beyond the headline rate to understand all charges that will appear on your bill

For a step-by-step guide to comparing energy rates in Illinois, visit our comprehensive resource on how to compare energy rates.

4. Work with an Energy Broker or Consultant

For larger commercial accounts, working with an energy broker can provide access to better rates and contract terms than you might obtain on your own. Brokers have relationships with multiple suppliers and understand the nuances of contract negotiation.

When selecting a broker, ensure they:

• Disclose how they're compensated (supplier commission vs. client fee)
• Represent multiple suppliers rather than being captive to one company
• Have experience with businesses similar to yours
• Can explain all contract terms in plain language

5. Monitor Your Bills Regularly

Don't file your energy bills without review. Establish a monthly routine to:

• Verify your supply rate matches your contract
• Track usage trends to identify anomalies
• Monitor demand charges for unexpected spikes
• Confirm all taxes and fees are calculated correctly

Consider implementing energy management software that can analyze your bills automatically and alert you to unusual patterns or potential billing errors.

Key Takeaways

Understanding your deregulated energy bill is fundamental to managing your business's energy costs effectively. Remember these essential points:

• Your utility (ComEd or Ameren) handles delivery while your alternative supplier provides the electricity itself
• Commercial bills include both energy charges (kWh) and demand charges (kW)—managing both is crucial
• Hidden fees like escalation clauses, uncapped pass-throughs, and excessive termination fees can erode your savings
• Proactive strategies including energy audits, demand management, and strategic shopping can significantly reduce your costs
• Regular bill monitoring helps catch errors and identify savings opportunities