Illinois commercial gas: choice and tariffs

Who can actually choose a gas supplier in Illinois

The program is defined by statute and administered by the Illinois Commerce Commission. Article XIX of the Illinois Public Utilities Act, cited on the Commission's own guidance at Section 19-125, requires an Alternative Gas Supplier to be certified by the ICC and registered with the local utility before it may serve residential and small commercial accounts, and the Commission's rule set for those suppliers is 83 Ill. Adm. Code 525. The operative limit for a business is the Commission's definition of small commercial, which it states as consumption below 5,000 therms a year. An account above that line is not part of the retail choice program, so a mid-size or industrial user typically moves by taking the utility's transportation service rather than by signing a competing retail contract.

• Program administered by the Illinois Commerce Commission (ICC).
• An Alternative Gas Supplier must be ICC-certified and registered with the utility.
• Small commercial is defined by the Commission as under 5,000 therms a year.
• Residential and small commercial choice in Nicor Gas, North Shore Gas and Peoples Gas.
• Small commercial choice also in Ameren Illinois territory.
• No ICC choice program in the territories of other gas utilities.

What the utility keeps, and what the supplier changes

A switch changes exactly one thing: the gas supply charge. The utility still owns the pipes, reads the meter, restores service and answers a leak. On the supply side, an account left with the utility is priced by a regulated Purchased Gas Adjustment (PGA), which the Commission describes as a monthly pass-through that includes the anticipated cost of gas plus a true-up of prior over- or under-recoveries, reviewed for prudence annually and passed on with no mark-up. The label differs by company: Nicor shows it as the Natural Gas Cost, while Peoples and North Shore show it as the Gas Charge. Where an Alternative Gas Supplier is used, the supply price is whatever the contract sets, and the Commission does not regulate that price at all. Billing can arrive as one combined bill or as two, depending on the supplier, so the first thing to check is who prints the bill.

• Only the supply charge moves; delivery, metering and safety stay with the utility.
• Utility supply is priced by the PGA: monthly pass-through plus true-up, no mark-up.
• Nicor labels the supply line Natural Gas Cost; Peoples and North Shore label it Gas Charge.
• An AGS price is contractual and is not regulated by the ICC.
• Billing may be combined or split; ask the supplier who prints the bill.

The tariff classes a commercial account lands in

Once an account is large enough to leave the retail program, it lands in the utility's own rate structure, and the class decides the mechanics. Nicor runs a sales ladder and a matching transportation ladder: Rate 4 General Service for annual use up to 800,000 therms, Rate 5 for seasonal loads that use under five per cent of annual gas in the January to April billing months, Rate 6 for large loads above 800,000 therms with a high load factor, and Rate 7 for the largest accounts billed on a demand basis, with Rates 74, 75, 76 and 77 as the unbundled transportation counterparts a Customer Select participant takes instead. Peoples Gas opens its Choices For You transportation rider, Rider CFY, to customers in Service Classification Nos. 1, 2 or 8 at a single point of metering. North Shore groups its small nonresidential classes and its large nonresidential classes into separate rate families with their own transportation riders.

• Nicor Rate 4: annual use up to 800,000 therms.
• Nicor Rate 5: seasonal use, under five per cent of annual gas in January to April.
• Nicor Rate 6: above 800,000 therms with a high load factor; Rate 7: demand-billed, largest.
• Nicor Rates 74/75/76/77 are the unbundled transportation partners of Rates 4/5/6/7.
• Peoples Gas Rider CFY is open to Service Classification Nos. 1, 2 and 8.
• North Shore splits small and large nonresidential classes into separate rate families.

Customer Select, the MDCQ and the Nicor Critical Day

On the Nicor system a transportation account buys its own commodity but still renegotiates the physical relationship with the utility every year, and two numbers govern it. The first is the Maximum Daily Contract Quantity, the largest daily volume the account may take; Nicor recalculates it each year from the prior calendar year's use, notifies the customer by 1 April and makes it effective 1 May, leaving it unchanged if the new figure is within five per cent of the old one. The second is the Critical Day, when the system is stressed and only firm, authorized volumes are allowed; gas a customer takes beyond its storage and authorized quantities is treated as unauthorized use and priced punitively under the tariff. A Customer Select participant also pays a program charge that recovers the supply cost the utility still carries on its behalf, offset by a per-therm transportation service credit for costs it no longer incurs. The account-level lesson is that the commodity contract is only half the arrangement; the delivery-side numbers reset on the utility's calendar, not the supplier's.

• MDCQ is the maximum daily contract quantity; Nicor resets it each year.
• Notice by 1 April, effective 1 May, unchanged if within five per cent.
• A Critical Day restricts the system to authorized, firm volumes.
• Use beyond storage and authorized quantities is billed as unauthorized use.
• Customer Select adds a program charge and a per-therm transportation service credit.
• Delivery-side numbers reset on the utility's calendar, not the supplier's.

Therms, Ccf and Mcf: the units that decide the comparison

An Illinois gas meter measures volume, but the bill is struck in energy, and the two are not the same number. A therm is 100,000 Btu, a Ccf is 100 cubic feet and an Mcf is 1,000 cubic feet, so one Mcf is ten Ccf. Utilities commonly bill smaller accounts in therms and larger transportation accounts in Ccf or Mcf, which is why two offers can look orders of magnitude apart until the unit is checked. The conversion is not fixed, because the heat content of the gas varies: billed therms equal metered Ccf multiplied by the utility's Btu factor, a number near 1.03 but set for the period and printed on the bill. To compare a per-therm offer with a per-Mcf offer, convert both to the same unit using your own bill's factor before anything else is weighed.

• Therm: 100,000 Btu, the usual energy unit on a smaller commercial bill.
• Ccf: 100 cubic feet; Mcf: 1,000 cubic feet, which is ten Ccf.
• Billed therms = metered Ccf x the utility's period Btu factor.
• The factor is near 1.03 but varies by company and period.
• Convert both offers to the same unit before comparing them.

Fixed or indexed for an Illinois winter: the arithmetic

The choice between a fixed and an indexed product is a decision about where the winter exposure sits, and it can be reasoned without any published price. First split twelve months of therms into the heating months and the rest; for a predominantly space-heated commercial load the heating months commonly carry roughly forty to sixty per cent of annual consumption, but that is a planning range, not an Illinois statistic, and the real number comes from the account's own bills. The winter share is the exposure; the summer therms barely move. A fixed product sells certainty and prices the risk in, so it usually starts higher than an index that leaves the risk with the buyer. For any fixed offer the useful questions are what index, term and volume assumptions built the number, and what happens at the end of the term.

• Split twelve months of therms into heating months and the rest.
• A space-heated commercial load often runs roughly forty to sixty per cent of annual gas in winter.
• Treat that as a planning range and compute the real share from your own bills.
• Fixed buys certainty at a priced-in premium; indexed keeps the risk and starts lower.
• Ask what index, term and volume assumptions built a fixed number.
• Ask what the rate rolls to at the end of the term.

Where Illinois gas comes from in winter

Illinois produces little gas of its own, so the winter story is about moving molecules to a Chicago-centred market. The delivered-price benchmark for northern Illinois is the Chicago Citygate, and the region leans on the interstate systems that converge there, including Natural Gas Pipeline Company of America, ANR, Alliance, Rockies Express, Trunkline and Vector. Vector is the physical bridge to the Dawn Hub in Ontario: the Canada Energy Regulator describes it as carrying gas between Joliet, Illinois, and Dawn at roughly 1.745 billion cubic feet a day, and describes Dawn as a storage complex of about 280 billion cubic feet, one of the largest in North America. Storage buffers the seasonal mismatch, but it does not erase basis risk, because withdrawability on the coldest days, not total inventory, is the binding constraint. A fixed commodity price addresses the first of three exposures; transportation capacity and daily deliverability remain.

• Chicago Citygate is the delivered-price benchmark for northern Illinois.
• Interstate systems into the region include NGPL, ANR, Alliance, Rockies Express, Trunkline and Vector.
• Vector moves gas between Joliet, Illinois, and the Dawn Hub in Ontario.
• The CER records Vector at roughly 1.745 Bcf/d and Dawn at about 280 Bcf of storage.
• Storage smooths the season but does not remove basis or deliverability risk.
• Commodity price, transportation capacity and daily deliverability are three separate exposures.

The Illinois exit rules, and the first bill after a switch

Illinois gives a switching customer specific exit rights worth knowing before signing. The Commission's guidance states that a customer may rescind an agreement without penalty within ten business days after the date on the utility's notice confirming the switch; a customer not eligible to rescind may still terminate without an early-termination fee, though gas already used must be paid for. Returning to utility supply is also boxed in: an account that goes back may have to choose a new supplier within 120 days or stay on utility supply for a year. A supplier may not assign the agreement to another supplier without giving at least thirty days' written notice. On the first bill, confirm the supplier of record is the one that was signed, check the billing determinants against what was priced, and confirm the delivery line did not move. Whether an address can choose a supplier at all depends on the service address, the meter and the utility territory - municipal utilities, cooperatives and some jurisdictions have no retail choice. HighGround may receive compensation from providers on completed purchases, and an inquiry places no order and switches no supplier.

• Rescind without penalty within ten business days of the utility's switch notice.
• Accounts not eligible to rescind may terminate with no early-termination fee.
• Return to utility supply: pick a new supplier within 120 days, or stay a year.
• An assignment to another supplier needs at least thirty days' written notice.
• On the first bill: check the supplier of record and the billing determinants.
• Eligibility turns on the service address, meter and utility territory.

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