Navigating the Interplay of PJM and MISO Markets: Implications for Illinois Businesses with Facilities in Both Zones

Illinois occupies a unique and complex position in the North American power grid. It is one of the few states in the country that is split between two major Regional Transmission Organizations (RTOs): PJM Interconnection and the Midcontinent Independent System Operator (MISO).

For businesses with multiple facilities across the state—such as a manufacturer with plants in both Elk Grove Village (PJM) and Decatur (MISO), or a retail chain with stores in both Aurora (PJM) and Springfield (MISO)—this "RTO divide" is more than just a geographic curiosity. It is a major driver of energy cost volatility and procurement complexity. Navigating the "seam" between PJM and MISO requires a sophisticated strategy that balances different market rules, capacity pricing, and risk profiles.

The Invisible Line Dividing Illinois: Understanding the PJM vs. MISO Landscape

The "seam" between PJM and MISO roughly follows the boundary between the ComEd service territory in the north and the Ameren Illinois service territory in the south and central regions.

PJM Interconnection: The Northern Powerhouse

PJM is the world's largest competitive wholesale electricity market, serving 65 million people across 13 states and D.C. In Illinois, PJM's footprint is primarily the ComEd territory.

• Market Design: PJM is known for its highly sophisticated "Capacity Market" (the Reliability Pricing Model or RPM), which is designed to ensure there is enough generation to meet future demand.
• Resource Mix: Traditionally, PJM has relied heavily on coal and nuclear, though it is rapidly transitioning to natural gas and renewables.

MISO: The Midcontinent Giant

MISO manages the grid across 15 U.S. states and the Canadian province of Manitoba. In Illinois, MISO's footprint is the Ameren Illinois territory.

• Market Design: MISO's market is historically more "energy-only" focused, with a capacity mechanism (the Planning Resource Auction or PRA) that has traditionally resulted in lower prices than PJM, though this is changing rapidly.
• Resource Mix: MISO has a massive amount of wind generation in the west, which can lead to negative energy prices during periods of high wind and low demand, but it faces challenges with transmission congestion.

To understand the specific auction differences, see our resource on MISO PRA vs. PJM BRA: what's the difference?.

Decoding Your Bottom Line: How PJM & MISO Drive Volatility and Create Hidden Costs

While the "energy" (the price per kWh of the electricity itself) is often similar between PJM and MISO, the "non-energy" components can vary wildly. This is where most Illinois businesses get tripped up.

1. The Capacity Pricing Divergence

Capacity is the cost of "being ready" to serve your peak load.

• PJM Strategy: PJM holds its capacity auctions three years in advance (the Base Residual Auction). This provides businesses with significant "visibility" into their future costs, allowing for more stable multi-year budgeting.
• MISO Strategy: MISO holds its capacity auction only one year in advance. This creates much higher year-over-year volatility. For example, in 2022, MISO capacity prices in Illinois spiked from $5/MW-day to $236/MW-day—a 40-fold increase that caught many businesses off guard.

2. Transmission and Ancillary Charges

Each RTO has its own "tariff"—the set of rules and fees for using the grid.

• PJM's NITS and Transmission: Transmission costs in PJM (Network Integration Transmission Service) are based on your 1CP (One Coincident Peak)—your usage during the single highest hour on the PJM grid.
• MISO's Transmission: MISO transmission costs are often simpler but can be influenced by regional "cost allocation" for new transmission lines being built to bring wind power from the plains to the cities.

3. Regional Weather Impacts

Because PJM and MISO cover different geographic areas, they are affected differently by regional weather. A polar vortex hitting the East Coast will drive up PJM prices, while a heatwave in the Great Plains will stress the MISO grid. An Illinois business in both zones effectively has "weather diversification," which can be both a benefit and a risk.

For more on these impacts, see impact of regional weather extremes on Illinois commercial energy prices.

Unlocking Savings: A Unified Energy Procurement Strategy for Your Illinois Facilities in PJM & MISO

Most multi-site businesses in Illinois manage their energy in silos—one contract for ComEd and another for Ameren. This is a mistake. A unified strategy allows you to leverage the strengths of each market.

1. Portfolio Hedging

Instead of thinking of each facility as an isolated island, think of them as a "portfolio." You may choose a "fixed-rate" contract for your MISO facilities to protect against their higher capacity volatility, while using a "block-and-index" strategy for your PJM facilities to take advantage of PJM's more stable capacity outlook.

2. Coordinated Demand Response

By participating in demand response programs in both RTOs, you can maximize your incentive payments. However, the rules are different. PJM's emergency DR programs are very different from MISO's LMR (Load Modifying Resource) programs. A unified strategy ensures that your facilities are ready to respond to whichever grid is most stressed at any given time.

3. Negotiating "Multi-Zone" Supplier Contracts

Large retail energy suppliers operate in both PJM and MISO. By negotiating one master agreement for all your Illinois locations, you can leverage your total volume to get lower "adders" (the supplier's margin) and better contract terms (like 100% usage bandwidth).

Check out our guide on best practices for negotiating commercial energy contracts with multi-year terms in Illinois.

Your Strategic Advantage: Partnering with an Expert to Navigate the PJM-MISO Seam

The "seam" between PJM and MISO is one of the most complex areas of the North American energy market. Very few business owners have the time or tools to monitor the regulatory filings, auction results, and grid conditions in both RTOs simultaneously.

The Role of the Energy Consultant

A qualified energy consultant provides the "unified view" you need. They use sophisticated modeling software to:

• Compare the "all-in" costs of different contract structures across both zones.
• Predict your 1CP and 5CP coincident peaks in PJM and MISO to lower your transmission and capacity tags.
• Monitor the "Change in Law" provisions in your contracts, ensuring that suppliers aren't overcharging you for RTO-related regulatory shifts.

The Importance of Interval Data

To manage across the RTO divide, you must have demand interval data for all your locations. This allows your consultant to see your "coincident peak" performance and identify opportunities to shift load between zones if one RTO is facing a price spike.

Conclusion

For Illinois businesses, the PJM-MISO divide is a fundamental reality of doing business in the state. While it adds a layer of complexity, it also offers a strategic opportunity for those who understand the market dynamics. By moving away from siloed management and adopting a unified, portfolio-based procurement strategy, multi-site businesses can outmaneuver the volatility of each RTO, lock in lower rates, and turn the Illinois energy divide into a competitive edge. Whether your facilities are in the shadows of Chicago's skyscrapers or in the heart of the Illinois corn belt, success starts with navigating the seam.

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Sources:

• PJM Interconnection - Territory and Market Maps
• MISO Energy - Regional Overview
• Illinois Commerce Commission (ICC) - Electricity Market Information
• Federal Energy Regulatory Commission (FERC) - RTO/ISO Overview
• PJM-MISO Joint and Common Market Initiative