Industry Basics in Deregulated Markets

There are four fundamental components of the electricity industry in the deregulated marketplace, these include: generation, alternative retail electric supply, transmission, and distribution.

Industry Basics in Deregulated Markets

Generation – Electricity is generated at power plants. Generation plants are powered through the use of coal, natural gas, nuclear fission, hydro, and a small-but-growing percentage of renewable generation sources such as wind, solar, and biomass fuels.

ARES (Alternative Retail Electric Supplier) – An ARES or Supplier is a business that sells electricity to residential and/or commercial customers in a competitive market. These entities may buy their electric generation on the open market and resell to their customers. To be an ARES in Illinois, an electric supplier must be certified by the ICC and complete the utility’s registration process. mc² is a licensed ARES in the state of Illinois.

Transmission – The movement of electricity at high voltage from the generation plants to the local distribution power grid (in northern Illinois for ComEd, it’s the “PJM COMED Zone”). This is typically regulated by the Federal Energy Regulatory Commission (FERC).

Distribution – The process of local delivery of electricity to homes and businesses, including the management and responsibility for reading the meters and maintaining the local utility distribution network. ComEd provides this utility function in northern Illinois. ComEd is regulated by the Illinois Commerce Commission (ICC).