NOVEMBER 2007

LEGISLATIVE UPDATE: ILLINOIS TO START

REGULATING THE ABCs

The Illinois General Assembly has passed new legislation that will impose licensing requirements on agents, brokers, and consultants (ABCs) engaged in the procurement or sale of retail electric supply.

Public Act 095-0679 (the Broker Licensing Act) became law on
October 17, 2007. However, the Broker Licensing Act requires that the Illinois Commerce Commission (ICC) promulgate rules and regulations to define the specific licensing and regulatory requirements. Although the ICC has not yet initiated a rulemaking proceeding, the Commission recently has announced that it intends to initiate a workshop process soon. That process eventually will yield the specific licensing and regulatory requirements.

The Broker Licensing Act certainly will add another layer of ICC regulation into the already complex landscape of the Illinois electricity market. ABCs whose businesses include electricity procurement or supply issues – and customers and Alternative Retail Electric Suppliers (ARES) who work with such entities – should be aware of this developing area of agency oversight and regulation.

The ABCs Of The Legislation

The Broker Licensing Act (codified at 220 ILCS 5/16-115C) adds an entirely new section to Title 16 of the Illinois Public Utilities Act, and provides that:

"No person or entity shall act as an agent, broker, or consultant engaged in the procurement or sale of retail electric supply for third parties unless that person or entity is licensed by the Commission under this Section or is offering services on their own behalf” as a certified ARES.

The Broker Licensing Act applies to anyone acting as an “agent, broker, or consultant,” defined as:

“[A]ny person or entity that attempts to procure on behalf of or sell retail electric service to an electric customer in the State.”

However, the definition of an ABC excludes:

  • An ICC-certified ARES offering retail electric service on its own behalf;
  • A person acting exclusively on behalf of a single ARES (assuming proper disclosure of that fact);
  • A person or entity representing a municipal power agency; and
  • A person or entity attempting to procure on behalf of or sell retail electric service to a third party with an aggregate billing demand for all of its affiliated electric service accounts in Illinois greater than 1,500 kW.

The Broker Licensing Act requires the ICC to establish licensing requirements for ABCs that must include the following criteria:

  • Technical competence;
  • Managerial competence;
  • Financial responsibility, including the posting of an appropriate performance bond; and
  • Annual reporting requirements, including the submission of:
    • A verified report detailing all contractual relationships with each certified electricity supplier in Illinois relating to retail electric service;
    • A verified report detailing the distribution of customers with the various certified electricity suppliers in Illinois;
    • A verified financial statement; and
    • A verified statement of any changes to the original licensure and a notice of continuing compliance with the licensing requirements.

The Broker Licensing Act also imposes a variety of additional requirements on regulated ABCs, including:

  • A written disclosure requirement to all customers regarding anticipated remuneration over the course of a contract;
  • A prohibition against holding oneself out as independent or unaffiliated with any supplier if the ABC has a contractual relationship with any retail electricity supplier or its affiliates regarding retail electric service in Illinois;
  • A prohibition against false, misleading, materially inaccurate, defamatory, or otherwise deceptive language or materials used in soliciting or providing services;
  • A requirement to maintain copies of marketing materials for at least three years;
  • A prohibition against presenting electricity pricing information in a manner that favors one supplier over another, unless a “valid pricing comparison” is used; and
  • A requirement to comply with provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act relating to electric service provider selection, switching, advertising, and billing.

The Broker Licensing Act gives the ICC jurisdiction over “disciplinary proceedings and complaints” for violations of the Act and sets forth a progressive disciplinary scale, providing for license suspension of up to two years. The Broker Licensing Act does not explicitly address whether an allegedly aggrieved party might also pursue a remedy in court.

Next, The ICC Must Promulgate Rules For The ABCs

Despite the statement in the Broker Licensing Act that it becomes effective “upon becoming law,” the ICC has not yet initiated a formal proceeding to promulgate rules and regulations to define the Broker Licensing Act’s specific licensing and regulatory requirements. The Broker Licensing Act does not set a deadline for initiation of that proceeding, but the Commission has stated that it will begin the workshop process in the near future. That will be the first step towards spelling out these rules and regulations.

Although the concept of the Broker Licensing Act is relatively straightforward, the Act’s language contains a number of ambiguities. The ICC likely will be called upon to resolve these ambiguities in establishing its applicable regulations.


This document should not be construed as legal advice applicable to any specific set of facts or to any particular agent, broker, consultant, or other party potentially affected by the Broker Licensing Act. Each such party should consult with counsel to evaluate the specific application or impact of the Broker Licensing Act.