Electricity trading review: CERC eyes rationalization of fees as market coupling nears rollout in 2026

The Central Electricity Regulatory Commission (CERC) is considering streamlining transaction fees charged by power exchanges, a move that could potentially reduce electricity costs for buyers as the sector prepares for the rollout of market coupling.

The development comes as CERC advances market coupling, a key reform aimed at improving efficiency, increasing liquidity and promoting price convergence between electricity exchanges. Over time, these changes are expected to reduce the overall cost of electricity supply for distribution companies and large consumers.

Market coupling, approved by the regulator in July after more than two years of deliberations, is expected to be introduced gradually, starting with the day-ahead market (DAM) from January 2026, in line with a PTI report. Under this mechanism, buy and sell offers on all power exchanges will be aggregated to discover a single market clearing price, replacing the current system of multiple prices on all platforms.

An official said PTI that the CERC finalized a discussion paper titled ‘Review of transaction fees charged by power exchanges’ in December 2025. Speaking on condition of anonymity, the official said the regulator was reviewing whether the existing transaction fee framework – currently capped at 2 paise per unit – remains appropriate in a market that has seen a sharp increase in trading volumes and is transitioning towards a unified price discovery system.

Among the proposals under consideration are a flat transaction fee of around 1.5 paise per unit for most business segments. Currently, exchanges typically charge fees close to the regulatory cap, the PTI report added. Another suggestion is to reduce transaction fees to 1.25 paise per unit for forward contracts (TAM), given their longer duration and relatively low operational intensity compared to short-term transactions.

India’s trade-based electricity market has grown significantly over the past decade. Electricity traded on exchanges has increased 16-fold since 2009-2010, with total traded volumes exceeding 120 billion units in 2023-24. While the overnight market previously accounted for almost all of the volume traded, the live, intraday and futures segments now constitute a growing share.

Industry experts say market coupling is expected to reduce price differences between exchanges, improve generation capacity utilization and allow buyers to access electricity at more efficient rates. The Indian Energy Exchange (IEX) currently accounts for almost 90% of power trading volumes on the exchanges, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) account for the rest. Under the approved framework, the three exchanges will operate as market coupling operators on a rotational basis, with Grid-India acting as a backup and audit operator to ensure the integrity of the system.

Officials noted that the design of transaction fees will take on greater importance once exchanges stop competing in price discovery. With transaction fees accounting for more than 95% of revenue at established exchanges, any recalibration is expected to have a material impact on the sector.

The PTI report adds that discussions on transaction fees are still at an early stage and any final decision would follow stakeholder consultations and align with CERC’s broader objective of improving the efficiency, transparency and affordability of Indian electricity markets.