New Delhi, Dec 28: The Central Electricity Regulatory Commission (CERC) is examining a potential reduction in transaction fees charged by power trading exchanges, a move that could lower electricity prices for consumers as the sector prepares for the landmark market coupling reform.
The power regulator’s review comes as it advances market coupling—a major reform expected to enhance efficiency, deepen liquidity and promote price convergence across all power exchanges. The initiative could ultimately reduce the overall cost of electricity for buyers over time.
Market coupling, approved by CERC in July 2025 after more than two years of deliberations, will be introduced in phases starting with the day-ahead market (DAM) from January 2026. Under this mechanism, buy and sell bids across all power exchanges will be aggregated to discover a single market-clearing price, replacing the current fragmented system where multiple prices exist across different platforms.
A senior official revealed that CERC finalized a staff paper titled ‘Review of Transaction Fee charged by the Power Exchanges’ in December 2025. The regulator is evaluating whether the current transaction fee framework—capped at 2 paise per unit—remains appropriate given the sharp rise in trading volumes and the transition to a unified price discovery system.
Several proposals are under consideration. One suggestion recommends fixing the transaction fee at 1.5 paise per unit for most trading segments, down from the current ceiling of 2 paise per unit that exchanges typically charge. Another proposal suggests lowering fees further to 1.25 paise per unit for term-ahead market (TAM) contracts, reflecting their longer tenure and relatively lower operational intensity.
“The regulator is examining whether the current fee structure is justified in a market that has grown substantially and is moving towards unified pricing,” the official said on condition of anonymity.
India’s exchange-based power market has witnessed remarkable expansion over the past decade. Electricity traded on exchanges has risen more than 16-fold since 2009-10, with total traded volumes exceeding 120 billion units in 2023-24. While the day-ahead market once dominated trading, real-time, intra-day and term-ahead segments now constitute a growing share of volumes.
Industry experts believe market coupling will reduce price disparities across exchanges, improve generation capacity utilization and enable buyers to access power at more competitive rates. “Since bids are aggregated across all exchanges, prices are expected to converge and soften to some extent, benefiting distribution companies, large consumers and eventually end-users,” an expert noted.
Indian Energy Exchange currently commands nearly 90 per cent of exchange-based power trading volumes, with Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) accounting for the remainder. Under the approved market coupling framework, all three exchanges will function as Market Coupling Operators on a rotational basis, while Grid-India will serve as backup and audit operator to ensure system integrity.
Officials emphasized that transaction fee design will become increasingly critical once exchanges cease competing on price discovery. Since transaction fees contribute over 95 per cent of revenues for established exchanges, any recalibration is expected to significantly impact the sector’s financial dynamics.
The official clarified that discussions on transaction fees remain at a preliminary stage. Any final decision will follow comprehensive stakeholder consultations and align with the broader objective of improving efficiency, transparency and affordability in India’s evolving power markets.
