Grid Congestion and Basis Risk in the PJM ComEd Zone

For a commercial buyer in northern Illinois, the number on a supply quote is only part of the story. The wholesale market underneath that quote prices electricity differently at different locations, and the reason is the physical grid. Transmission lines have limits. When those limits bind, the price of energy at your location diverges from the price at a common reference point. That divergence, and the risk that comes with it, is what this guide is about. Understanding congestion and basis will not hand you a lower rate by itself, but it will let you read an energy procurement offer for what it actually exposes you to.

Locational Marginal Pricing in PJM

ComEd territory sits inside PJM, the regional transmission organization that operates the wholesale market across the mid-Atlantic and parts of the Midwest. PJM does not set one price for the whole footprint. Instead it uses locational marginal pricing, which produces a separate energy price at each of thousands of pricing points, called nodes, spread across the network.

The locational marginal price at any node has three components: the cost of the marginal energy itself, the cost of congestion, and the cost of transmission losses. The energy component is roughly common across the system. The congestion and loss components are what make one location cost more or less than another. When you buy commercial electricity through a supply contract tied to the market, the price you settle against reflects the node or zone where your load is delivered, not an abstract system average.

What Congestion Actually Is

Congestion is a physical phenomenon with a financial consequence. The grid operator dispatches generation to meet load at the lowest total cost, but every transmission line and transformer has a thermal and stability limit. When the least-cost available generation would push more power across a line than that line can safely carry, the operator cannot use all of it. It must instead dispatch costlier generation located on the correct side of the constraint to serve the affected load.

That substitution raises the price in the constrained area. The result is that two locations, perhaps not far apart, can clear at meaningfully different prices in the same hour because a binding constraint sits between them. Congestion is not a fee someone chose to charge. It is the market revealing what it costs to move power around a physical bottleneck. In a dense load pocket like the greater Chicago area, congestion patterns can be persistent in some hours and absent in others, driven by weather, generation availability, and line outages.

Defining Basis Risk

Basis is the difference between the price at your delivery location and the price at a reference hub that the market treats as a benchmark. If your location consistently clears above the hub, you carry positive basis; if below, negative basis. Basis risk is the uncertainty in that relationship over the life of a contract.

The reason basis risk deserves a commercial buyer's attention is that many supply products are priced off a hub or a forward curve, while your energy is physically delivered at a zone or node. Any structure that leaves the hub-to-load gap unhedged passes that gap to you. Congestion is the largest driver of basis, so basis risk is, in practical terms, congestion risk plus the smaller loss differential.

How Basis Risk Shows Up in Supply Products

Different contract structures assign basis risk differently, and this is where the concept becomes a purchasing decision rather than a piece of theory.

A fully fixed, all-in price transfers basis risk to the supplier. They forecast congestion and losses for your zone across the term and bake an estimate into the rate. You gain certainty; you pay for the supplier's estimate and their margin for bearing the uncertainty.

An index or spot-pass-through product does the opposite. You settle against the actual locational price, so real congestion in the ComEd zone flows straight to your bill, hour by hour. There is no premium for someone else to carry the risk, but there is no protection either.

Block-and-index and other hybrid structures split the difference. You might fix a base block of energy and leave the balance floating, or fix the energy component while leaving congestion and losses to pass through. In every hybrid, the practical question is the same: which portion of the locational price is fixed, and which portion still moves with the grid?

Reading an Offer With Basis in Mind

When you compare quotes, confirm what each price includes. A quote that looks lower may exclude congestion and loss adjustments that a higher quote has already absorbed. Ask whether the energy price is struck at the hub or at the ComEd zone, and how congestion and losses are handled if they are not fully fixed. Two offers are only comparable once you know they cover the same components.

It also helps to look at your own load shape. Because congestion tends to concentrate in high-demand hours, a facility that runs hard during peak periods is more exposed to adverse basis than one with a flat, off-peak-weighted profile. The same logic connects basis management to demand charge management and to your capacity tag: reducing load in the hours the system is stressed tends to help on more than one line of the bill at once.

Grounding Decisions in Real Data

The disciplined way to assess basis is to examine actual history rather than any single quoted number. PJM publishes locational marginal prices, including the separated congestion and loss components, for the ComEd zone through the data tools on pjm.com. Reviewing how the zone has priced relative to the hub across seasons gives you a fact-based sense of the range, which is far more useful than a supplier's summary figure. Because these values change with grid conditions, treat them as inputs to verify at the source, not as fixed constants.

Sources

• PJM Interconnection: markets and operations data
• ComEd for business
• Illinois Commerce Commission

Congestion and basis are structural features of how power is priced in the PJM ComEd zone, not levers a supplier can eliminate. Knowing how they work lets you compare index and pass-through products on equal terms and match a structure to your own risk tolerance, without any promise of a particular outcome.