Annual Illinois Retail Market Report Calculates Supplier Concentration; Updates Muni. Aggregation Activity

July 4, 2011
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An annual retail electric market report by Illinois' Office of Retail Market Development finds that the Commonwealth Edison non-residential market is generally less concentrated among suppliers versus the year-ago.

Based on the volume of deliveries served, ORMD calculated a Herfindahl-Hirschman Index (HHI) for the non-residential market at Commonwealth Edison and each of the Ameren Rate Zones. The concentrations only examined switched volumes (excluded default service/hourly supply) and also excluded suppliers serving only their own load.

Generally speaking, an HHI below 1500 is unconcentrated meaning many similarly sized firms compete for the same customers); a market with an HHI between 1500 and 2500 is moderately concentrated; and a market with an HHI above 2500 is highly concentrated (very few firms dominating the market).

Among all non-residential classes, the supplier-served market at ComEd had an HHI score of 848, versus 1336 a year ago. The HHI at Ameren Rate Zone I was 1409 versus 1454 in 2010, at Ameren Rate Zone II was 2333 versus 2319 in 2010, and at Ameren Rate Zone III was 1630 versus 1457.

Generally, at the customer class level, the small customer non-residential markets exhibited less concentration among suppliers versus the large customer non-residential markets.

Several of the Ameren very large classes (3 MW and larger) showed HHI numbers in excess of 2500, but ORMD noted that the very small number of customers in these classes drives these numbers.

ORMD said that future reports will likely provide a market concentration analysis for the residential market.

ORMD also reported on the proliferation of opt-out municipal aggregation, with some 20 municipalities in the ComEd territory approving such pools through late April. ORMD posts a list of municipalities with opt-out aggregation on the ICC website.

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