Navigating PJM and MISO Markets for Illinois Businesses
By Illinois Commercial Energy editorial team
Reviewed by JakenEnergy commercial energy team
An Illinois business shopping for a competitive electricity supply price is, without always realizing it, standing at the end of a long wholesale market chain. That chain is run by a regional grid operator, and which operator depends on where the business is located. This guide explains how PJM and MISO organize their wholesale markets, energy, capacity, and ancillary services, and traces how that structure ultimately reaches a commercial buyer through a supply offer.
Two Regions Serving One State
Illinois is split between two grid operators. ComEd serves northern Illinois and operates within the PJM Interconnection. Ameren Illinois serves central and southern Illinois and operates within MISO. A regional grid operator, sometimes called a regional transmission organization, is responsible for keeping supply and demand in balance across its footprint, running the wholesale markets that price electricity, and coordinating the reliability of the transmission network.
The single most important thing to understand is the boundary between wholesale and retail. PJM and MISO run wholesale markets among generators, suppliers, traders, and large participants. Your business does not transact in those markets directly. Instead, a supplier or your utility's default service buys in the wholesale market and repackages the result into a retail price you can sign. Understanding the wholesale structure helps you read a retail offer with a clearer eye. For the retail side and how to run a competitive process, see our overview of commercial energy procurement and commercial electricity in Illinois.
The Energy Market
Energy is the electricity commodity itself, measured in kilowatt-hours. Both PJM and MISO price energy in two coordinated stages. The day-ahead market lets participants schedule and price power for each hour of the coming day based on expected demand and available supply. The real-time market then settles the differences as actual conditions unfold, since real demand and generator availability never perfectly match the forecast.
Prices in these markets are locational. Rather than one price for the whole region, the market calculates a price at many points on the grid, reflecting the cost of serving demand at each specific location. This locational structure exists because the transmission system has limits, and delivering power to one place can cost more than another when the grid is congested. Energy is usually the largest single component of a supply price, and it is where most of the price competition between suppliers happens. We explain the mechanics of locational pricing in understanding real-time price formation in PJM.
The Capacity Construct
Capacity is not energy you consume. It is a commitment that enough generation and other resources will be available to serve the region when demand peaks. Grid operators procure this commitment in advance so reliability does not hinge on hoping enough supply appears on the most stressful day of the year.
PJM and MISO secure capacity through different auctions. PJM uses its Base Residual Auction under the Reliability Pricing Model, historically organized around a delivery year. MISO uses its Planning Resource Auction, which moved to a seasonal construct so that capacity is procured separately for different seasons. Both use zonal structure to reflect transmission limits. The result is that a business in ComEd territory and a business in Ameren territory face capacity shaped by different auction designs. We compare the two in MISO PRA vs PJM BRA: what's the difference, and cover the three buckets your supply price rests on in capacity, energy, and transmission.
The capacity component reaches your bill through your account's peak contribution. How much you draw during regional peak conditions helps set your share of capacity cost, which is one reason load shape, not just total usage, matters for what you pay.
Ancillary Services
Beyond energy and capacity, grid operators run markets for ancillary services. These are the supporting functions that keep the grid stable moment to moment: reserves that can respond quickly if a generator trips offline, resources that help hold system frequency steady, and other balancing products. They are a smaller slice of total cost than energy or capacity, but they are a real part of what it takes to run the grid reliably.
For a commercial buyer, ancillary services usually arrive as a modest component folded into a supply price rather than a line item you negotiate directly. It still helps to know they exist so that when a supply contract references them, you understand what they represent. We cover how they appear at the retail level in ancillary services on retail bills.
How the Structure Reaches Your Supply Price
Putting it together, a retail supply offer is a repackaging of these wholesale pieces. A supplier looks at expected energy prices in the day-ahead and real-time markets, the capacity obligation tied to your account, the ancillary services and transmission costs of serving you, and its own risk and margin. It then presents a price, which may bundle all of this into one fixed number or pass some components through as they move.
This is why two offers that look similar on the surface can carry very different risk. A fully bundled fixed price shifts the risk of wholesale swings to the supplier. A pass-through structure leaves some of that risk with you. Neither is automatically better; the point is to know which wholesale components an offer includes or floats, because that determines what can move your cost during the term. Remember throughout that no wholesale clearing price is your retail rate. It is an input the supplier translates into an offer, and your delivery charges remain with your utility no matter which supplier you choose.
Sources
This article is educational and does not promise any specific savings, price, or outcome.
Frequently Asked Questions
QWhat are PJM and MISO?
PJM Interconnection and MISO, the Midcontinent Independent System Operator, are regional grid operators that manage the high-voltage electricity system across large multi-state areas. They run wholesale markets for energy and capacity, coordinate reliability, and direct the flow of power. Northern Illinois sits in PJM through ComEd, and central and southern Illinois sits in MISO through Ameren.
QWhat markets do PJM and MISO run?
Both operate a day-ahead energy market and a real-time energy market, a capacity construct that secures resources for future peak demand, and ancillary services markets that keep the grid balanced moment to moment. These are wholesale markets among generators, suppliers, and other participants. Their outputs become inputs to the retail supply prices that commercial customers eventually pay.
QHow do wholesale markets reach my business bill?
You do not buy directly from PJM or MISO. A retail supplier or your utility's default service participates in those wholesale markets and packages the results into a supply price. That price reflects wholesale energy, capacity, ancillary services, and transmission, plus the supplier's costs and risk margin. Your delivery charges are separate and stay with your utility.
QDoes my Illinois utility change based on the grid operator?
Your delivery utility is fixed by your location: ComEd in the north, Ameren Illinois in central and southern areas. The utility always handles the wires, meter, and outages regardless of who supplies your energy. What changes with the grid operator is the wholesale market structure that shapes the supply side of your pricing.