In Ameren Illinois’ territory, for example, 75% of all commercial and 92% of industrial customers are supplied by a third-party supplier. This is, very plainly, a result of the fact that most business customers qualify for better rates through these suppliers than what the regulated utility can offer. This is mainly due to three factors:
- A regulated utility generally only changes their rates once per year so they can’t react to market conditions like a company whose only job is to provide a commodity to the customer can.
- A regulated utility can’t make or lose money on supply. This means that when they do set their rates every year, they are not just setting them based on current market conditions and prices, but also based on how well or poorly they estimated prices the previous year! If they underestimated supply costs the previous year, rates could be higher in the upcoming year to make up for the revenue lost purchasing energy at those higher rates for the previous year.
- A regulated utility has to charge every commercial and industrial account the same rate: no matter their load profile, when they use the most energy each day/month, how much they use, etc. Coupled with their requirement to balance costs and the necessary use of averaging in order to estimate future rates, this equates to higher than market value rates for at least half of their customers. When your business’ load is priced individually using your specific load profile, you get a rate that is what suppliers are willing to offer YOU for YOUR load. And this allows your business to be proactive in managing costs by pricing and locking rates in for future peak period usage during the off-season.