The Central Electricity Regulatory Commission (CERC) has initiated a review of the transaction fees levied by power trading exchanges, a move that could potentially lead to lower electricity procurement costs for buyers across India. This review coincides with the regulator's push to implement the long-awaited market coupling mechanism, aimed at enhancing market efficiency and price uniformity.
Fee Revision on the Table as Volumes Soar
According to an official familiar with the matter, CERC finalized a staff paper in December 2025 titled 'Review of Transaction Fee charged by the Power Exchanges'. The regulator is examining whether the existing fee cap of 2 paise per unit remains suitable given the dramatic growth in traded volumes and the impending shift to a unified price discovery system through market coupling.
One of the proposals under active consideration is reducing the fee to a fixed 1.5 paise per unit for most trading segments. Currently, exchanges charge fees close to the permitted ceiling. A separate proposal suggests an even lower fee of 1.25 paise per unit for Term-Ahead Market (TAM) contracts, acknowledging their longer tenure and lower operational intensity.
Market Coupling: A Game-Changer Set for 2026
The fee review gains significance alongside the rollout of market coupling, approved by CERC in July 2024 after over two years of deliberation. This reform is scheduled to be implemented in phases, starting with the integration of the Day-Ahead Market (DAM) from January 2026.
Once operational, market coupling will pool all buy and sell bids from India's three power exchanges—Indian Energy Exchange (IEX), Power Exchange India Ltd (PXIL), and Hindustan Power Exchange Ltd (HPX)—to determine a single market-clearing price. This will replace the current system where prices can differ across platforms. IEX currently dominates the landscape, commanding nearly 90% of exchange-based trading volume.
Under the approved framework, all three exchanges will serve as Market Coupling Operators on a rotational basis, with Grid-India acting as the backup and audit operator to ensure system integrity.
Implications for Efficiency and Affordability
Industry experts believe the dual moves of fee revision and market coupling will transform India's power market. The primary benefits are expected to be reduced price disparities across exchanges, better utilization of generation capacity, and more efficient power procurement rates for buyers.
"Since bids are aggregated across all exchanges, prices are expected to converge and soften to some extent, benefiting distribution companies and large consumers and eventually end-users," an expert explained to PTI.
The growth of India's exchange-based power market underscores the need for these reforms. Traded electricity has skyrocketed, increasing more than 16 times since 2009-10, with total volumes surpassing 120 billion units in the 2023-24 fiscal year. While the Day-Ahead Market was once dominant, segments like real-time, intra-day, and term-ahead trading are now claiming a growing share.
With transaction fees constituting over 95% of revenues for established exchanges, any revision will significantly impact the sector. The CERC official noted that discussions are at a preliminary stage, and final decisions will follow stakeholder consultations, guided by the overarching goals of improving efficiency, transparency, and affordability in the nation's power markets.
