Seasonal Energy Pricing 101

For homeowners and renters alike, higher electricity bills in the summer are nothing new.  But what drives those seasonal changes can be more complicated than the average customer may realize.  

In this blog post, we will take a closer look at the Electricity Supply components of an electricity bill: energy and capacity. We will explain what each means, why costs can rise during periods of high demand, and how seasonal pricing can differ depending on whether a customer receives electricity from their utility’s default supply service or an Alternative Retail Electric Supplier (ARES).

Electricity bills also include other costs that this post will not cover: Delivery and Special Program costs. Delivery costs cover transmission and distribution charges while Special Program costs cover utility energy efficiency and demand response programs, Renewable Portfolio Standard charges, utility riders, and other components. For more information, customers can explore the Understanding Your Bill pages for ComEd, Ameren Illinois, or MidAmerican.

What Drives Seasonal Electricity Prices?

To understand why electricity prices are often highest in the summer months, we’ll look at both energy and capacity costs.

Energy is the electricity you use, typically represented by the costs per hour such as cent per kilowatt-hour or dollar per megawatt-hour.

Wholesale energy prices are typically highest when demand is high because more expensive generation sources are needed to meet that increased demand. As demand rises, grid operators turn on the cheapest generators first, moving from cheapest to most expensive until supply matches demand.

For example, on a cool autumn night, electricity demand is relatively low, and lower-cost resources such as renewables and nuclear may be sufficient to meet demand. On a scorching summer afternoon, demand can rise sharply, requiring operators to bring additional, typically more expensive and less efficient resources online. These plants often utilize natural gas, oil and coal to bridge the gap between customer demand and available supply.

These final power sources that turn on only during periods of the highest demand are often referred to as peak load power plants or peaker plants. Peaker plants often yield much higher prices because they are built to only run for short durations when demand it at its greatest or during an emergency.

The seasonality of energy pricing doesn’t stop at the type of energy being dispatched – it also depends on reliability.

Capacity: Paying for Reliability

Capacity is the maximum operating availability of a generation resource to produce power whenever needed, described in kilowatt (kW) or megawatt (MW) terms. That availability is translated into a price paid to generators to ensure enough power plants are available when they are needed. This is also known as a reliability cost. Capacity does not pay for the actual energy produced, but rather for the ability to produce power when it’s needed.

Capacity prices in Illinois are established through auctions conducted by the multi-state Regional Transmission Organizations that cover the state – PJM in northern Illinois and MISO in central and southern Illinois. Utilities and energy suppliers pay capacity prices, often passing them on to customers via their monthly bills.

Both PJM and MISO establish capacity prices through annual auctions, but pricing variation varies by organization: PJM establishes a single annual capacity price, while MISO establishes different prices across each season. As a result, capacity costs impacting Ameren Illinois and MidAmerican customers are typically much higher in the summer, when MISO’s capacity prices are high, and lower in Spring when capacity prices are typically low.

The figure below demonstrates capacity prices resulting from MISO’s seasonal Planning Resource Auctions (PRA) from 2023-2024 to 2026-2027.

Though PJM sets its once annually capacity prices for an entire year, those prices still reflect peak demand, often over-represented by summer needs.

Notably, capacity prices in the PJM and MISO markets rose sharply for the 2025-2026 and 2026-2027 delivery years. These price increases are largely driven by surging electricity demand, primary fueled by the proliferation of new data centers. Higher prices from PJM and MISO capacity auctions reflect a more constrained market, and those higher prices are generally passed through to customers.

A Counterweight for ComEd customers

For ComEd customers, IPA-administered Carbon Mitigation Credits (CMCs) represent a valuable counterweight against high capacity costs and variable energy costs. Created under the 2021 Climate and Equitable Jobs Act, the CMC initiative supports nuclear plant operators in the ComEd region by providing payments to eligible nuclear facilities when energy and capacity prices are low. However, when prices are high, the initiative also requires operators to provide payment to ComEd (which are then passed through to ratepayers), in recognition of plants receiving more revenue than required for continued operation.

As of August 2026, ComEd ratepayers have received an aggregate credit of over $2.631 billion on their electricity bills through the initiative.

How Can Electricity Supply Rates Differ?

While capacity and energy prices impact how your electricity bill changes throughout the seasons, the impact can vary based on your electric supplier – particularly whether you are an Alternative Retail Electric Supplier (ARES) customer or a default service customer. That’s because Illinois has a deregulated, restructured electricity market, meaning customers of Ameren Illinois, ComEd, and MidAmerican Energy have the option to choose their electricity supplier.

ARES customers are those who have chosen a third-party supplier, whether individually or through opt-out municipal aggregation. These alternative suppliers may not necessarily follow the same seasonal rate changes that utilities follow.

ARES may offer rates that are set for longer periods of time. While utilities set their rates twice a year, ARES often offer fixed rates set for an entire year or longer. These differing rate structures can result in widely varying electricity costs, depending on your supplier.

Default service customers are residential and small commercial customers who have not switched to an ARES (or to an alternative supply rate, such as real-time-pricing), also referred to as eligible retail customers. The IPA procures electricity to meet the supply requirements for these customers, whose share amounts to roughly 15-30% of retail electricity sales in Illinois.  

The IPA’s procurement approach aims to facilitate market competition and to mitigate risk and price volatility for customers. The Agency employs a laddered procurement strategy, conducting two procurement events each year and securing portions of future electricity supply over time.

This approach has produced significant savings for default service customers. Between 2015-2025, ComEd and Ameren Illinois residential customers paid a combined total of more than $2.1 billion to alternative electricity suppliers versus prices available through the IPA-procured default supply rate, according to consumer advocate Citizens Utility Board’s review of annual state reports.

It’s also worth noting that while the IPA does not conduct capacity procurements for ComEd or MidAmerican default service customers, the Agency does conduct certain capacity procurements for Ameren Illinois default service customers. More information about these procurements can be found in the Agency’s annual Electricity Procurement Plans.

In addition to its electricity procurement work, the IPA conducts activities to bring new renewable resources online across the state – including utility-scale and energy storage projects. By helping to bring more generation online, these efforts help provide downward pressure on energy prices for all customers, across all seasons.

posted September 14, 2026