Power trading overhaul: CERC eyes fee rationalisation as market coupling nears 2026 rollout

ENERGY REGULATOR: The Central Electricity Regulatory Commission (CERC) is considering rationalizing transaction fees charged by energy trading exchanges, a move that could lower electricity costs for buyers as the sector prepares to begin market coupling.

This development comes as CERC advances market coupling, a major reform aimed at improving efficiency, deepening liquidity and promoting price convergence across energy exchanges. Over time, the changes are expected to reduce the overall cost of purchasing energy for distribution companies and large consumers.

The market coupling, which was approved by the regulator in July after more than two years of deliberations, is proposed to be introduced in phases, starting with the next-day market (DAM) from January 2026, according to PTI a report. Under this mechanism, buy and sell offers will be aggregated across all energy exchanges to discover a single market settlement price, replacing the current system of multiple prices across platforms.

An official said PTI CERC has completed a working paper titled “Review of Transaction Fees Charged by Energy Exchanges” in December 2025. The official, who spoke on the condition of anonymity, said the regulator is examining whether the current transaction fee framework — currently set at 2 paise per unit — remains appropriate in a market that has seen a sharp rise in trading volumes and is moving 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 sectors. Nowadays, exchanges typically charge fees close to the regulatory ceiling PTI Report added. Another proposal is to reduce transaction fees to 1.25 paise per unit for futures market (TAM) contracts, given the longer duration and relatively lower operational intensity compared to short-term deals.

The exchange-based power market in India has expanded significantly over the past decade. Electricity trading on stock exchanges has increased more than 16 times since the period 2009-2010, with the total trading volume exceeding 120 billion units in the period 2023-2024. While earlier the next-day market accounted for almost all trading volume, the real-time, intra-day and futures segments now make up an increasing share.

Market coupling is expected to narrow spreads across exchanges, improve generation capacity utilization and enable buyers to access power at more efficient rates, industry experts say. The Indian Energy Exchange (IEX) currently accounts for approximately 90% of exchange-based power trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) make up the rest. Under the approved framework, all three exchanges will act as market coupling operators on a rotating 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 have greater importance once exchanges stop competing for price discovery. With transaction fees contributing more than 95% of the revenue of existing exchanges, any recalibration is expected to have a material impact on the sector.

Discussions on transaction fees are still at a preliminary stage, and any final decision will follow stakeholder consultations and is consistent with CERC’s broader goal of enhancing efficiency, transparency and affordability in India’s energy markets, the PTI report added.