India’s power market regulator is reviewing the transaction fee structure charged by electricity exchanges, as it moves ahead with the long-awaited market coupling reform, a move expected to enhance efficiency, deepen liquidity and reduce electricity costs over time.
Market coupling, approved by the Central Electricity Regulatory Commission (CERC) in July 2025 after more than two years of deliberations, will be implemented in a phased manner starting January 2026, beginning with the day-ahead market (DAM).
Under market coupling, buy and sell bids across all power exchanges will be aggregated to discover a single market-clearing price, replacing the current system where prices differ across trading platforms.
CERC Examines Transaction Fee Framework
An official aware of the development said CERC has finalised a staff paper in December 2025 on the Review of Transaction Fee Charged by the Power Exchanges.
The regulator is assessing whether the existing transaction fee cap of 2 paise per unit remains appropriate in a market that has seen exponential growth in trading volumes and is transitioning to a unified price discovery mechanism.
Currently, power exchanges typically charge transaction fees close to the regulatory ceiling.
Proposed Fee Changes Under Review
Among the options being examined by the regulator are:
- A fixed transaction fee of 1.5 paise per unit for most trading segments
- A lower fee of 1.25 paise per unit for term-ahead market (TAM) contracts, considering their longer duration and lower operational intensity
Officials said discussions are still at a preliminary stage, and any final decision will follow stakeholder consultations.
Market Coupling to Reshape Power Trading
India’s exchange-based power market has expanded sharply over the past decade. Electricity traded on exchanges has risen over 16 times since 2009-10, with total volumes crossing 120 billion units in FY24.
While the day-ahead market once accounted for nearly all exchange volumes, real-time, intra-day and term-ahead segments now form a growing share of overall trading.
Industry experts believe market coupling will help reduce price disparities, improve generation capacity utilisation, and enable buyers to access electricity at more efficient 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 industry expert said.
Impact on Power Exchanges
Currently, the Indian Energy Exchange (IEX) accounts for nearly 90% of exchange-based power trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) make up the remainder.
Under the approved framework, all three exchanges will act as Market Coupling Operators on a rotational basis, with Grid-India designated as a backup and audit operator to ensure system integrity.
Officials noted that transaction fee design will gain importance once exchanges stop competing on price discovery.
With transaction fees contributing over 95% of revenues for established power exchanges, any recalibration of fees could have a material impact on the sector’s business model.
What Lies Ahead
Regulators emphasised that any changes to transaction fees will be aligned with the broader objective of improving efficiency, transparency and affordability in India’s power markets, while ensuring system stability during the transition to market coupling.
