The Indian Energy Exchange, or IEX, which holds a near-monopoly with over 99% of the collective market share, has filed a petition challenging the Central Electricity Regulatory Commission (CERC)’s order.
The CERC has proposed a “round-robin” model where the three power exchanges will take turns acting as the Market Coupling Operator (MCO). Grid-India will serve as a fourth operator for audit and backup. The other two power exchanges in India, besides IEX, are Power Exchange of India Ltd (PXIL) and Hindustan Power Exchange Ltd (HPX).
The IEX petition:
The petition, filed under the Electricity Act, argues that the move is “arbitrary” and goes against the established multi-exchange regulatory framework.
IEX’s primary concern is that market coupling will dilute its competitive advantage and lead to a redistribution of business without a clear rationale for the change. The news of the CERC’s order has already had a significant impact on IEX’s stock price, causing a sharp decline.
In its petition, IEX has also sought approval for two new products: the Peak Day Ahead Market (Peak DAM) and the Peak Real Time Market (Peak RTM).
These new markets are designed to specifically address the growing challenge of meeting India’s rising electricity demand during peak hours. By creating dedicated platforms for peak power, IEX aims to offer greater flexibility for both buyers and sellers, allowing them to better manage supply and demand during high-stress periods.
This move is seen by some as IEX’s attempt to innovate and maintain its market leadership in the face of the market coupling threat.
| The CERC order’s main points on market coupling are |
| Mandate for Phased Implementation: The order directs a gradual rollout of market coupling, beginning with the Day-Ahead Market (DAM) by January 2026. |
| Uniform Price Discovery: The core objective is to aggregate all buy and sell bids from different power exchanges to establish a single, uniform market clearing price for electricity. |
| Rationale: The decision is based on a “shadow pilot” study that showed market coupling would lead to gains in overall market welfare, cleared volume, and economic surplus. |
Backdrop:
The CERC has been pushing for the implementation of market coupling, a mechanism designed to create a single, uniform price for electricity across all exchanges in India.
This is intended to optimize power grid usage, enhance competition, and benefit consumers by ensuring a single
clearing price.
The CERC’s order from July 23, 2025, directed a phased rollout of this process, starting with the DAM by January 2026.
This decision was based on a “shadow pilot” conducted by Grid-India, which showed marginal welfare and volume gains from coupling the market.
The impact on the power sector:
The outcome of this legal challenge will have a profound impact on the future of India’s power market.
If the IEX appeal succeeds, it would allow the exchange to retain its dominant position and continue its independent
growth strategy.
Conversely, if the CERC’s order is upheld, it could fundamentally reshape the power trading landscape. The implementation of market coupling would create a level playing field, potentially increasing competition among power exchanges and leading to more efficient price discovery.
This could, in the long run, translate into more stable and potentially lower electricity prices for consumers. The introduction of new peak-hour products, regardless of the market coupling decision, signifies a broader industry trend toward creating more specialized and dynamic trading mechanisms to meet the evolving needs of the grid.
