Your electricity bill in India might soon go down
What's the story
The Central Electricity Regulatory Commission (CERC) is reviewing transaction fees charged by power trading exchanges. The move comes as part of the regulator's efforts to implement market coupling, a reform aimed at improving price discovery efficiency, increasing liquidity, and standardizing electricity prices across trading platforms. This could eventually lead to lower electricity costs for consumers in India over time.
Gradual rollout
Market coupling: A phased implementation
Market coupling, which CERC approved in July after two years of discussions, will be implemented in phases. The first phase will start with the day-ahead market (DAM) from January 2026. Under this system, buy and sell bids from all power exchanges will be pooled together to determine a single market-clearing price. This is different from the current system where prices differ across exchanges.
Fee assessment
CERC reviews transaction fee structure
CERC is reviewing whether the current transaction fee cap of 2p per unit is still relevant. This comes as traded volumes have surged and the market moves toward a unified price discovery mechanism. Among the options being discussed are a fixed transaction fee of 1.5p/unit for most trading segments and a lower fee of 1.25p/unit for term-ahead market contracts, given their longer tenure and lower operational intensity.
Market expansion
India's exchange-based power market: A decade of growth
India's exchange-based power market has grown exponentially in the last decade. Electricity traded on exchanges has increased more than 16 times since 2009-10, with total traded volumes exceeding 120 billion units in 2023-24. The day-ahead market once accounted for nearly all exchange-based trading, but real-time, intra-day and term-ahead segments are now taking an increasing share.
Expert opinion
A solution to price disparities
Experts believe that market coupling will help reduce price differences across exchanges, improve generation capacity utilization, and give buyers access to power at more efficient rates. "Since bids are aggregated across all exchanges, prices are expected to converge and soften somewhat," an expert told PTI. This would benefit distribution companies, large consumers, and ultimately end-users.