Midwest Generation

By 1996, prevailing opinion on the utilities in the United States had changed. Rather than granting one company the exclusive right to generate, transmit and distribute electricity in a specific geographic area, and fixing the rates for that service as one package, it was commonly held that consumers would benefit from opening as much service as possible to competition on an open market. At the federal level, the Federal Energy Regulatory Commission had issued Order 888, opening access to the national transmission grids. Subsequent orders established an open energy marketplace and set rules for participation in it. However, it was left to the individual states to determine the best way to give their electricity customers access to the grid and the benefits of an open market.
For Illinois, the General Assembly passed the Electric Service Customer Choice and Rate Relief Law of 1997.[11] The law ordered most Illinois electric utilities (including Commonwealth Edison) to provide their customers with the option of buying electricity from other suppliers. It also reduced base residential electric prices by 15%, with a further 5% decrease effective in 2001, and froze the reduced rates for ten years. Finally, it obligated the utilities, at the end of that ten-year period, to obtain their electricity through a competitive process.
These rules made it politically desirable for Commonwealth Edison to divest itself of its generation interests, in an attempt to distance itself from any allegations of bias in the competitive process. It sold its coal-fired generating stations to Midwest Generation in 2000, and sold its nuclear generating stations to Exelon Nuclear, another subsidiary of its holding company, in 2003. In theory, this separated the business of generating and selling power from the business of transmitting and distributing it, though in practice the holding company still manages and profits from both businesses. The distinction was blurred even further by the long-term price agreements that went with the sale of the generating stations, under which ComEd was entitled to purchase power below market rates through the end of the rate freeze.




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For Illinois, the General Assembly passed the Electric Service Customer Choice and Rate Relief Law of 1997.[11] The law ordered most Illinois electric utilities (including Commonwealth Edison) to provide their customers with the option of buying electricity from other suppliers. It also reduced base residential electric prices by 15%, with a further 5% decrease effective in 2001, and froze the reduced rates for ten years. Finally, it obligated the utilities, at the end of that ten-year period, to obtain their electricity through a competitive process.




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