CERC Draft Norms Aim For Uniform Power Pricing Via Market Coupling

New Delhi, Apr 21 (KNN) The Central Electricity Regulatory Commission (CERC) has proposed a major overhaul of India’s electricity market, introducing a framework for a single, centrally discovered power price across exchanges through market coupling.
 
The Draft (Power Market) (Second Amendment) Regulations, 2026, issued on April 17, aim to aggregate bids from all power exchanges to determine a uniform market clearing price, replacing the current system where exchanges independently discover prices.
 
Grid India to lead price discovery
 
Under the proposal, Grid Controller of India Ltd will act as the Market Coupling Operator (MCO), responsible for aggregating bids and determining prices, reported Financial Express.
 
“Price discovery shall be done by the Market Coupling Operator,” the draft stated, adding that until formal notification, exchanges will continue to handle price discovery.
 
Shift from decentralised pricing
 
The move marks a shift from the existing decentralised model, which often results in multiple prices for electricity across exchanges. 
 
The new mechanism will use a standardised bid format, with exchanges transmitting data to the MCO for centralised price determination based on maximisation of economic surplus.
 
A uniform price will apply under normal conditions, while ‘market splitting’ will allow regional price differences in case of transmission congestion.
 
Phased rollout and operational framework
 
The reform will initially cover the Day-Ahead Market (DAM) and Real-Time Market (RTM), with plans to extend it to other segments in phases. 
 
Grid India has been tasked with developing a detailed Power Market Coupling Procedure (PMCP) within six months, outlining bid formats, algorithms and settlement processes.
 
Impact on power exchanges
 
The proposal is expected to significantly alter the role of power exchanges such as Indian Energy Exchange and Power Exchange India Ltd, as pricing control shifts to a central operator.
 
The move is expected to impact revenue models, as exchanges transition from price discovery to platform-based services. Market analysts noted that the change may also intensify competition among trading platforms.
 
Reflecting investor sentiment, shares of Indian Energy Exchange declined sharply following the announcement.
 
Towards a unified electricity market
 
According to the regulator, market coupling is expected to improve transmission utilisation, enhance liquidity, and enable efficient price discovery by consolidating bids into a single pool.
 
India’s short-term power market has been expanding steadily, reaching 218.22 billion units in 2023-24, highlighting the scale of the proposed reform.
 
CERC has invited stakeholder comments on the draft framework by May 16, 2026, after which the final regulations will be issued, paving the way for a unified national electricity market with a single price benchmark.
 
(KNN Bureau)