CERC Evaluates Power Trading Fees to Reduce Electricity Costs as Sector Prepares for Market Coupling
Electricity consumers in India may soon benefit from reduced costs as the Central Electricity Regulatory Commission (CERC) undertakes a review of transaction fees imposed by power trading exchanges. This initiative coincides with the CERC’s efforts to implement market coupling, a significant reform aimed at enhancing price efficiency, increasing liquidity, and standardizing electricity prices across various trading platforms. The anticipated changes are expected to lower overall power procurement costs over time.
Review of Transaction Fees
The CERC is currently evaluating the transaction fees charged by power exchanges, with a focus on whether the existing cap of 2 paise per unit remains suitable. This review comes at a time when trading volumes have surged, prompting the need for a reassessment of the fee structure. An official, who requested anonymity, revealed that a staff paper titled ‘Review of Transaction Fee charged by the Power Exchanges’ is set to be finalized by December 2025. Among the options being considered is a fixed transaction fee of 1.5 paise per unit for most trading segments, which would be a reduction from the current ceiling. Additionally, a proposal for a lower fee of 1.25 paise per unit for term-ahead market contracts is also under discussion, reflecting their longer duration and lower operational demands.
Implementation of Market Coupling
Market coupling, which received CERC approval in July after extensive discussions, is slated for a phased rollout beginning with the day-ahead market (DAM) in January 2026. This reform aims to consolidate buy and sell bids from all power exchanges, establishing a single market-clearing price. This shift is expected to replace the current system, where prices vary across different exchanges. Industry experts believe that market coupling will significantly reduce price disparities, enhance the utilization of generation capacity, and enable buyers to access power at more competitive rates. As bids are aggregated across all exchanges, prices are anticipated to converge, benefiting distribution companies and large consumers, ultimately leading to lower costs for end-users.
Growth of India’s Power Market
India’s exchange-based power market has experienced remarkable growth over the past decade. Since 2009-10, electricity traded through exchanges has increased more than sixteenfold, with total traded volumes surpassing 120 billion units in the 2023-24 fiscal year. While the day-ahead market previously dominated exchange trading, segments such as real-time, intra-day, and term-ahead markets are now capturing a larger share. Currently, the Indian Energy Exchange leads the market, accounting for nearly 90% of exchange-based trading volumes, while Power Exchange India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX) share the remainder.
Future Implications for Power Exchanges
The transaction fee structures will become increasingly important as exchanges transition away from competing on price discovery. With transaction fees constituting over 95% of revenues for established exchanges, any adjustments to these fees could significantly impact the sector. Discussions regarding transaction fees are still in the early stages, and any changes will be finalized following consultations with stakeholders. The overarching goal remains to enhance efficiency, transparency, and affordability within India’s power markets, ensuring that consumers can benefit from a more streamlined and cost-effective electricity procurement process.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
Follow Us on Twitter, Instagram, Facebook, & LinkedIn
