The Benefits of Bundled vs. Unbundled Electricity Services in Illinois

Decoding Your Illinois Energy Bill: Bundled vs. Unbundled Service Explained

In many states, you receive electricity as a single, "bundled" product from your utility. Illinois does things differently, and understanding this difference unlocks significant opportunities.

What is Bundled Service?

In a bundled model (traditional regulated utility service):

Your utility owns power plants and generates electricity
The utility transmits and distributes that electricity to your home
You pay one price for the combined package
You have no choice of provider
Rates are set by regulators based on utility costs

This is how electricity worked everywhere before deregulation and still works in many states.

What is Unbundled Service?

Illinois "unbundled" electricity service, separating it into two components:

Supply (generation):

The actual electricity you consume
Measured in kilowatt-hours (kWh)
Can be provided by your utility OR an alternative supplier
Competitive market—multiple suppliers compete for your business

Delivery (transmission & distribution):

Moving electricity from generators to your meter
Includes transmission lines, substations, local wires
Provided exclusively by your utility (ComEd or Ameren)
Regulated monopoly—no choice

How Your Bill Reflects Unbundling

Your Illinois electricity bill shows these components separately:

Supply charges: Cost of electricity itself (variable based on usage)
Delivery charges: Cost of grid infrastructure (partially fixed, partially variable)
Taxes and fees: Various government charges

Whether you use utility default supply or choose an alternative supplier, the delivery charges remain the same—only supply costs can be affected by shopping.

The Key Insight

Unbundling creates competition for the supply portion of your bill. While you can't choose your delivery provider (ComEd or Ameren is determined by your location), you CAN choose who supplies your electricity. This competition is meant to drive down prices and give consumers more options.

The Hidden Costs of 'Simplicity': Is Your Bundled Utility Rate Secretly Inflated?

If you don't actively choose a supplier, you receive "default" supply from your utility. While not exactly "bundled" (the bill still shows supply and delivery separately), default supply is the passive choice that many customers make without realizing they have options.

How Default Supply Works

ComEd and Ameren don't own power plants—they procure supply for default customers through competitive auctions run by the Illinois Power Agency:

Auctions held periodically to set rates
Multiple suppliers bid to provide blocks of power
Winning bids set the default supply rate
Rates change based on auction results

Is Default Supply Overpriced?

Default supply isn't necessarily bad, but it may not be optimal:

Potential advantages of default:

No contract commitment—switch anytime
Rates set through competitive auction (not arbitrary)
Simple—no action required
Consumer protections in place

Potential disadvantages:

May not be the lowest available rate
Rates fluctuate with auctions
No price lock—vulnerable to market changes
Limited product options (no green products, etc.)

Comparing Default to Market Rates

At any given time, alternative suppliers may offer:

Rates lower than default (competitive pressure)
Rates higher than default (premium products, poor timing)
Fixed rates for budget certainty
Green products backed by RECs
Various contract lengths

The key is comparing actual offers to your current default rate. Savings of 5-15% on supply costs are often achievable—but not always.

When Default Makes Sense

Default supply may be appropriate if:

Current default rate is competitive with market
You value flexibility over price certainty
You don't want to manage contracts and renewals
You're uncertain about future location or usage

But always know your options. Being informed about market rates helps you recognize when to stay and when to switch.

Unlock Major Savings: How Unbundling Gives Your Business Control Over Electricity Costs

Illinois' unbundled market creates opportunities that don't exist in regulated states.

The Power of Choice

Price competition: Dozens of licensed suppliers compete for your business. This competition tends to drive prices toward fair market levels and rewards informed shoppers.

Product variety: Beyond price, suppliers offer:

Fixed vs. variable rate options
Short-term and long-term contracts
Green/renewable products
Index-based pricing
Customized solutions for large users

Timing flexibility: You can lock in rates when prices are favorable and ride market rates when they're low.

Quantifying the Opportunity

For a typical commercial customer:

Supply portion: 40-60% of total bill
Potential savings: 5-15% on supply through shopping
Net bill reduction: 2-9% of total electricity cost

Example: A business spending $5,000/month on electricity with $2,500 in supply charges could save $125-375/month ($1,500-4,500/year) by finding a competitive rate.

Beyond Supply Savings

While you can't choose delivery providers, unbundling enables other strategies:

On-site generation: Generate your own power to reduce supply purchases

Community solar: Subscribe to local solar for bill credits

Net metering: Solar owners export excess power for credits

Demand response: Get paid to reduce consumption during peak periods

The unbundled structure makes these options more valuable because you can clearly see and affect the supply portion of your costs.

Your 4-Step Checklist to Choosing the Right Illinois Retail Electric Supplier

Ready to explore your options? Follow this process to find the best supplier for your needs.

Step 1: Know Your Baseline

Gather information:

Current utility bills (12 months ideally)
Average monthly kWh usage
Current supply rate ($/kWh from bill or utility website)
Account number and service address

Calculate current supply cost:

Monthly kWh × Supply rate = Monthly supply cost

This is your target to beat. Any supplier offer should be compared to this baseline.

Step 2: Compare Supplier Offers

Sources for quotes:

Illinois Energy Prices comparison tools
Direct requests to licensed suppliers
Energy brokers (for larger accounts)
Utility websites list licensed suppliers

What to compare:

Rate ($/kWh)—ensure it's all-in, including any fees
Contract length
Fixed vs. variable structure
Early termination fees
Renewal terms

Step 3: Evaluate Contract Terms

Critical terms to review:

Early termination fees: What's the cost to exit before contract end? Some have none; others charge $50-200 or more.

Renewal provisions: What happens when the contract ends? Auto-renewal at what rate? How much notice to cancel?

Rate structure: Is the rate truly fixed, or can it adjust? Are there separate fees beyond the per-kWh rate?

Supplier reputation: Check Illinois Commerce Commission for complaints. Research online reviews.

Step 4: Switch (It's Easy)

The process:

Confirm the offer details with your chosen supplier
Sign the contract (often online)
Supplier notifies your utility of the switch
Switch occurs on your next meter read (typically within 1-2 billing cycles)
No service interruption—same wires, same meter

After switching:

Verify new rate appears on your bill
Set calendar reminder before contract end
Monitor market for future opportunities

Red Flags to Avoid

Pressure tactics: Legitimate suppliers don't pressure immediate decisions
Unclear pricing: Rate should be clearly stated; ask about all fees
Too good to be true: Extreme discounts may have catches
Aggressive auto-renewal: Watch for contracts that auto-renew at much higher rates
Unlicensed suppliers: Verify license with ICC before signing

For more guidance on avoiding problems, see our article on avoiding supplier scams.

Frequently Asked Questions

What's the difference between bundled and unbundled electricity?

Bundled electricity combines generation and delivery into one package from one provider. Unbundled electricity (Illinois' model) separates them—you can choose your supplier for the generation/supply portion while delivery remains with your utility. This creates competition and choice for supply services.

If I switch suppliers, will my service be interrupted?

No. Switching suppliers is purely administrative—nothing physical changes. The same wires deliver electricity to the same meter. Your utility (ComEd or Ameren) still handles delivery, outages, and emergencies. The switch typically happens at your next meter reading, and you won't notice any difference in service.

Do I get two bills if I choose an alternative supplier?

Usually no. Most alternative suppliers use "utility consolidated billing" where your supply charges appear on your regular ComEd or Ameren bill. You still get one bill, with supply charges from your chosen supplier and delivery charges from your utility. Some suppliers offer separate billing if preferred.

Can I switch back to utility default supply?

Yes. You can return to utility default supply at any time, though if you're under contract with a supplier, early termination fees may apply. If you simply let your contract expire without renewing, you'll automatically return to default supply unless you choose another supplier.

Conclusion

Illinois' unbundled electricity market puts power in your hands—literally. By separating supply from delivery, the state created competition that can lower your costs and give you options that don't exist in traditionally regulated markets.

Whether you stay with default supply or shop for alternatives, understanding the unbundled structure helps you make informed decisions. Know your baseline costs, compare offers carefully, and read contract terms before committing.

For businesses especially, strategic energy procurement through supplier shopping can deliver meaningful savings. Combined with efficiency measures and on-site generation, unbundling provides multiple levers for controlling electricity costs.

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