Power trading overhaul: CERC eyes fee rationalisation as market coupling nears 2026 rollout
Indian Energy Exchange (IEX) currently accounts for nearly 90% of exchange-based power trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) comprise the remainder.
- Dec 28, 2025,
- Updated Dec 28, 2025 1:40 PM IST
Power regulator Central Electricity Regulatory Commission (CERC) is considering rationalising transaction fees charged by power trading exchanges, a move that could potentially lower electricity costs for buyers as the sector prepares for the rollout of market coupling.
The development comes as CERC advances with market coupling, a key reform aimed at improving efficiency, deepening liquidity and promoting price convergence across power exchanges. Over time, the changes are expected to reduce the overall cost of power procurement for distribution companies and large consumers.
Market coupling, approved by the regulator in July after more than two years of deliberations, is proposed to be introduced in a phased manner, starting with the day-ahead market (DAM) from January 2026, as per a PTI report. Under the mechanism, buy and sell bids across all power exchanges will be aggregated to discover a single market-clearing price, replacing the current system of multiple prices across platforms.
An official told PTI that CERC has finalised a staff paper titled ‘Review of Transaction Fee charged by the Power Exchanges’ in December 2025. Speaking on condition of anonymity, the official said the regulator is examining whether the existing transaction fee framework — currently capped at 2 paise per unit — remains appropriate in a market that has witnessed a sharp rise in trading volumes and is transitioning to a unified price discovery system.
Among the proposals under consideration is a fixed transaction fee of around 1.5 paise per unit for most trading segments. At present, exchanges typically charge fees close to the regulatory ceiling, the PTI report added. Another suggestion is to reduce the transaction fee to 1.25 paise per unit for term-ahead market (TAM) contracts, given their longer tenure and relatively lower operational intensity compared to short-term trades.
India’s exchange-based power market has expanded significantly over the past decade. Electricity traded on exchanges has increased over 16 times since 2009-10, with total traded volumes crossing 120 billion units in 2023-24. While the day-ahead market earlier accounted for nearly the entire traded volume, real-time, intra-day and term-ahead segments now constitute a growing share.
Industry experts say market coupling is expected to narrow price differences across exchanges, improve utilisation of generation capacity and enable buyers to access power at more efficient rates. Indian Energy Exchange (IEX) currently accounts for nearly 90% of exchange-based power trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) comprise the remainder. Under the approved framework, all three exchanges will function as Market Coupling Operators on a rotational basis, with Grid-India acting as a backup and audit operator to ensure system integrity.
Officials noted that transaction fee design will assume greater significance once exchanges cease competing on price discovery. With transaction fees contributing over 95% of revenues for established exchanges, any recalibration is expected to have a material impact on the sector.
The PTI report added that discussions on transaction fees are still at a preliminary stage, and any final decision would follow stakeholder consultations and align with CERC’s broader objective of enhancing efficiency, transparency and affordability in India’s power markets.
Power regulator Central Electricity Regulatory Commission (CERC) is considering rationalising transaction fees charged by power trading exchanges, a move that could potentially lower electricity costs for buyers as the sector prepares for the rollout of market coupling.
The development comes as CERC advances with market coupling, a key reform aimed at improving efficiency, deepening liquidity and promoting price convergence across power exchanges. Over time, the changes are expected to reduce the overall cost of power procurement for distribution companies and large consumers.
Market coupling, approved by the regulator in July after more than two years of deliberations, is proposed to be introduced in a phased manner, starting with the day-ahead market (DAM) from January 2026, as per a PTI report. Under the mechanism, buy and sell bids across all power exchanges will be aggregated to discover a single market-clearing price, replacing the current system of multiple prices across platforms.
An official told PTI that CERC has finalised a staff paper titled ‘Review of Transaction Fee charged by the Power Exchanges’ in December 2025. Speaking on condition of anonymity, the official said the regulator is examining whether the existing transaction fee framework — currently capped at 2 paise per unit — remains appropriate in a market that has witnessed a sharp rise in trading volumes and is transitioning to a unified price discovery system.
Among the proposals under consideration is a fixed transaction fee of around 1.5 paise per unit for most trading segments. At present, exchanges typically charge fees close to the regulatory ceiling, the PTI report added. Another suggestion is to reduce the transaction fee to 1.25 paise per unit for term-ahead market (TAM) contracts, given their longer tenure and relatively lower operational intensity compared to short-term trades.
India’s exchange-based power market has expanded significantly over the past decade. Electricity traded on exchanges has increased over 16 times since 2009-10, with total traded volumes crossing 120 billion units in 2023-24. While the day-ahead market earlier accounted for nearly the entire traded volume, real-time, intra-day and term-ahead segments now constitute a growing share.
Industry experts say market coupling is expected to narrow price differences across exchanges, improve utilisation of generation capacity and enable buyers to access power at more efficient rates. Indian Energy Exchange (IEX) currently accounts for nearly 90% of exchange-based power trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) comprise the remainder. Under the approved framework, all three exchanges will function as Market Coupling Operators on a rotational basis, with Grid-India acting as a backup and audit operator to ensure system integrity.
Officials noted that transaction fee design will assume greater significance once exchanges cease competing on price discovery. With transaction fees contributing over 95% of revenues for established exchanges, any recalibration is expected to have a material impact on the sector.
The PTI report added that discussions on transaction fees are still at a preliminary stage, and any final decision would follow stakeholder consultations and align with CERC’s broader objective of enhancing efficiency, transparency and affordability in India’s power markets.