The Central Electricity Regulatory Commission (CERC) has introduced a draft set of regulations titled “Central Electricity Regulatory Commission (Power Market; Second Amendment) Regulations, 2026,” aimed at advancing market coupling in electricity trading. This initiative follows an earlier order from July 2025 and is currently open for public comment.
Market coupling refers to the integration of power exchanges that enables electricity prices to be determined through a central process, rather than by separate exchanges. This mechanism allows all bids to be pooled together, resulting in a single market-clearing price, which improves the efficiency of transmission capacity usage. CERC asserts that without market coupling, the three power exchanges in India—Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HEP)—operate independently, risking liquidity concentration in one exchange at the expense of the others.
Through market coupling, if a buyer submits an order via PXIL and a seller operates through IEX, they effectively engage in the same market, thus receiving the same clearing price. This structure enables participants to select exchanges based on factors such as service, fees, technology, or contracts rather than merely the availability of liquidity.
The draft regulations designate Grid India, a government-owned entity, as the sole market coupling operator (MCO), a shift from the previous proposal which suggested a rotation among the three exchanges, with Grid India acting as a backup. As the sole MCO, Grid India is tasked with aggregating bids from the three exchanges to establish a uniform market-clearing price.
Grid India is required to develop a detailed Power Market Coupling Procedure (PMCP) within six months of the amendment notification. This PMCP will define the operational framework for market coupling, outlining the responsibilities of the MCO, power exchanges, and the National Load Despatch Centre. It will also specify operational timelines, encryption protocols, price discovery algorithms, and procedures for bid handling, scheduling, and settlement.
Reactions to the draft regulations have been mixed. While CERC believes that market coupling fosters competition among multiple exchanges, critics argue that it could disadvantage IEX, which has pioneered products and innovation in the market, while potentially rewarding less successful exchanges. IEX has expressed opposition to the draft; Rohit Bajaj, Joint Managing Director of IEX, remarked that while stakeholder comments will shape the final regulations, the current draft does not effectively serve consumer interests or enhance market depth.
The draft is set for finalization following stakeholder feedback, with the publication date noted as April 27, 2026.
