1. The Illinois Model of Retail Competition
Presentation to
Massachusetts Electric Restructuring Roundtable
in joint session with
XENERGY’s 11th Executive Forum
May 18, 2001
Arlene A. Juracek
Commonwealth Edison Company
Vice President, Regulatory & Strategic Services

2. Supply & Demand in the Competitive Market
Today
The Illinois Restructured Marketplace
Illinois v. California
Keys to Competition
Promoting Competitive Marketplace

3. Illinois Restructuring - Legislative Background
Electric Service Customer Choice & Rate Relief Act of 1997
A transition enabler--not an end-state design
Bundled Rates Frozen through 2004
FACs eliminated
Decommissioning costs rolled out
One of the Largest Residential Rate Cuts in the Nation
15% for ComEd on August 1, 1998
5% for ComEd on October 1, 2001
Meter Surcharge Imposed to Fund Supplemental Low-Income Assistance, Energy Efficiency and Coal Technology Development Assistance Programs

4. Illinois Restructuring - Legislative Background (Con’t.)
Retail Choice Phased In over 3-year Period
Most large customers eligible on October 1, 1999
All non-residential eligible on December 31, 2000
Residential customers eligible on May 1, 2002
Transition Charges Determined through a “Revenues Lost” Approach
Market value employed is equal to the value of utility’s opportunity to resell freed up energy
Charges may be imposed through 12/31/06, but can be extended to 12/31/08 with ICC approval
Utilities Allowed, But Not Required, To Divest Generation and Transmission Assets

5. Illinois Restructuring - Legislative Background (Con’t.)
Mandatory ISO/RTO Membership
Act Does Not Address Power Exchange (“PX”) Concept and Does Not Contain Any Restrictions on Power Purchases
Customer Safety Nets Provided by the Act
Tariffed, cost-based rates available to all customers until service is declared competitive
Tariffed, market-based rates available to small commercial and residential customers after service is declared competitive
Tariffed rates available to larger customers for at least 3 years after service is declared competitive
An unbundled, Power Purchase Option (“PPO”) available to non-residential customers paying transition charges

6. Illinois Restructuring - Legislative Background (Con’t.)
Customer Safety Nets Provided by Utilities
Utilities voluntarily offer interim supply service at market-based rates to customers dropped by their alternative suppliers

7. Illinois Restructuring - ComEd’s Experience
All Commercial and Industrial Customers Have Choice Now
More than 300,000 customers
12,389 customers have chosen other than bundled service
Represents 5,044 MW of demand on a 21,800 MW system
19 million MWh of sales representing about 31% of eligible sales
Based on Current Market Prices, Many Transition Charges Are Less Than ½¢ / kWh and Some Customers Will See Charges Drop to Zero Before 12/31/06
Residential Open Access Tariffs in the Works
Risks Associated with Being the Provider of Last Resort (“POLR”) Will Increase as More Customers Exercise Choice

8. How Is Illinois Different from California?
ComEd: Retail rates are frozen until 1/1/05, but . . .
ComEd has a forward hedged supply with its generation affiliate
California utilities were forced to purchase supply on the spot market
Illinois: Regional Generation and Transmission
ComEd transmission import capability > 4,500 MW
Illinois: MAIN regional reserve margin > 18%, plus undedicated IPP generation
ComEd: MAIN Reserves > 20% for 2001
California: Virtually no new plants for a decade
California: Likely blackouts this summer
ComEd’s service territory has seen significant additions of new IPP generation on-line in 2001with much more to come

9. New Supply - Key to Competition
ComEd Actively Invited New IPP Generation Into Its Service Territory
Actively encouraging IPP development
Posted electrically optimum site locations on the Internet
Well articulated interconnection policies
Experiments to encourage renewables and DG
As a Result, ComEd’s Service Territory Has the Most Active Development of New IPP Generation in the Nation
3,600 MW on-line in 2001
1,100 MW under construction now for 2002
4,100 MW in design for 2002

10. Siting - Key to Competition
The Illinois Commerce Commission, the Illinois EPA, and the Illinois Pollution Control Board Follow a Balanced Approach to Approving New Generation
Restructuring in Illinois Is Being Phased in Over Several Years to Allow for Adjustments, Rather than All at Once
Nevertheless, Some IPPs Have Encountered Local Siting Difficulties
Governor’s Task Force on peaker siting

11. Competitors - Key to Competition
There Are Sixteen Retail Electric Suppliers in Illinois
AES NewEnergy, Inc. Enron Energy Services, Inc.
Ameren Energy Marketing Co. Illinois Power Co.
AmerenCIPS MidAmerican Energy
Blackhawk Energy Service, L.L.C. Nicor Energy, L.L.C.
CMS Marketing, Services and Trading Co. Peoples Energy Services Corp.
Central Illinois Light Co South Beloit Water Gas & Electric Co.
Dynegy Energy Services, Inc. Unicom Energy, Inc.
EnerStar Power Corp. WPS Energy Services, Inc
All of these Suppliers Are Currently Able, or Certificated to, Provided Service to Nonresidential Customers in ComEd’s Service Territory
Nine of the Sixteen Have Limited Their Sales to Customers with a Maximum Demand of 1 MW or Over and/or within Certain Utility Service Territories .

12. Promoting Competitive Retail Markets
Act Locally, But Think Regionally by
Encouraging IPP development
Promoting and pursuing improvements to the regional transmission highway
Fostering the development of vibrant regional wholesale markets
Trust the “Invisible Hand” of Competition

13. Downside of the Competitive Game
San Diego
L.A.