Nov. 1--BlueStar Energy Services Inc., a Chicago-based alternative electricity provider, sparked a buzz in the metro-east last week. That's when it announced it could save Ameren Illinois customers who sign up with them 10 percent or more on their power bills.

BlueStar's announcement, occurring nearly three years after the state had deregulated its electricity market, seemed proof the grand vision behind deregulation -- to drive down consumer prices through competition -- was finally being realized.

Or was it?

Lynne Kiesling, an expert on the retail electricity market, has doubts whether BlueStar can sign up enough customers to ensure a truly competitive residential electricity market in the metro-east or elsewhere across Illinois.

Kiesling's concerns revolve around a provision in state law that makes the state's two top power companies -- Ameren Illinois and Commonwealth Edison -- the beneficiaries of what's known as the "default service contract."

When Illinois opened up its electricity market to competition, a lot of political jockeying occurred over the question of what do for customers who "choose not to choose," said Kiesling, an economist who teaches at Northwestern University outside Chicago.

"But this is an industry that has been regulated and granted a government monopoly for a century," she said. "So there's a lot of inertia. So for a lot of people the easiest option is to stay with the incumbent."

Which means BlueStar faces big hurdles in the residential market because companies like it must "make a compelling argument for having some sort of new and interesting bundle of products and services to enable you, the consumer, to manage and control your own electricity decisions," she said. "I hope they can sustain that, but I'm not very optimistic."

Guy Morgan, BlueStar's chief executive, sounded a more upbeat note, predicting that customers who switch over from Ameren Illinois will "see lower prices, better customer service and more innovation" as a result of competition.

BlueStar will succeed because of the firm's successful track record in serving commercial and industrial customers, Morgan said.

It's a track record based on the firm's ability to react quickly to changes in wholesale power prices and to buy electricity from suppliers on a daily basis, he said.

In contrast, state-regulated utilities such as Ameren and the state-run Illinois Power Authority bid on power contracts only once a year, Morgan said.