CERC Weighs Cut in Power Exchange Transaction Fees Ahead of Market Coupling
The Central Electricity Regulatory Commission is considering rationalising transaction fees charged by power trading exchanges as it moves ahead with market coupling, a reform that could lower electricity procurement costs over time, officials said.
Market coupling, approved by the commission in July after more than two years of deliberations, is set to be rolled out in phases, beginning with the day-ahead market from January 2026.
What is Market Coupling?
Under the mechanism, buy and sell bids across all exchanges will be pooled to discover a single market-clearing price, replacing the current system where prices vary across platforms.
An official said the regulator finalised a staff paper in December 2025 titled “Review of Transaction Fee charged by the Power Exchanges.” The review is examining whether the current transaction fee framework, capped at two paise per unit, remains appropriate in a market where trading volumes have risen sharply and price discovery will become unified.
Proposed Transaction Fee Changes
Proposals under discussion include fixing a transaction fee of 1.5 paise per unit for most trading segments. Another option being examined is reducing the fee to 1.25 paise per unit for term-ahead market contracts, which have longer tenures and lower operational intensity.
Under the existing framework, exchanges typically charge fees close to the prescribed ceiling.
Impact on Indian Power Market
India’s exchange-based electricity market has expanded sharply over the past decade, with traded volumes rising more than 16 times since 2009-10. Total electricity traded on exchanges crossed 120 billion units in 2023-24.
While the day-ahead market earlier accounted for most traded volumes, real-time, intra-day and term-ahead segments now form a growing share of exchange-based trading.
Benefits of Market Coupling
Industry participants expect market coupling to narrow price differences across exchanges, improve generation capacity utilisation and allow buyers to procure power at more efficient rates.
“Since bids are aggregated across all exchanges, prices are expected to converge and soften to some extent, benefiting distribution companies and large consumers,” an industry expert said.
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Major Players in the Indian Power Exchange Market
Indian Energy Exchange currently accounts for nearly 90% of exchange-based power trading volumes. Power Exchange India Ltd and Hindustan Power Exchange Ltd make up the remainder.
Under the approved market coupling framework, all three exchanges will serve as Market Coupling Operators on a rotational basis, with Grid-India acting as a backup and audit operator.
To learn more about the Indian Energy Exchange, visit our page on Indian Energy Exchange.
Transaction Fee Design
Officials said transaction fee design will take on greater importance once exchanges no longer compete on price discovery. Transaction fees account for more than 95% of revenues for established power exchanges.
The official said discussions remain at an early stage and any decision on transaction fees will follow stakeholder consultations and align with the broader objective of improving efficiency, transparency and affordability in India’s power markets.
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