Could Your Power Bill Drop Soon? CERC Moves to Slash Trading Fees

Is Relief on the Way for India’s Power Bills?

After years of volatile energy costs, a significant shift could be coming to India’s electricity sector. The Central Electricity Regulatory Commission (CERC) has initiated a comprehensive review of power trading fees—a move that experts say could lead to tangible lower electricity prices for both industrial buyers and everyday households .

This isn’t just a minor bureaucratic tweak. It’s part of a much larger, systemic reform: the upcoming nationwide implementation of market coupling, a sophisticated mechanism designed to unify fragmented power markets and eliminate price arbitrage. If successful, this transformation could make India’s electricity procurement more efficient, transparent, and—most importantly—cheaper.

Table of Contents

• What Is the CERC Power Trading Fee Review?
• How Lower Electricity Prices Will Actually Happen
• Market Coupling: The Game-Changer
• India’s Fragmented Power Trading Landscape
• Who Benefits? Consumers, DISCOMs, and Industry
• Challenges and Implementation Timeline
• Conclusion: A More Efficient Grid, Fairer Prices
• Sources

What Is the CERC Power Trading Fee Review?

Currently, power is traded on three major platforms in India: the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX). Each charges a fee—typically between 3 to 7 paise per unit—for facilitating transactions between generators and buyers (like state DISCOMs or large industries) .

The CERC is now evaluating whether these fees are justified and if they can be reduced or standardized. The logic is simple: lower transaction costs = lower overall procurement costs = potential savings passed on to end consumers.

How Lower Electricity Prices Will Actually Happen

It’s crucial to understand that lower electricity prices won’t appear overnight. The mechanism works like this:

1. Reduced Fees: Lower trading fees decrease the total cost for DISCOMs when they buy power.
2. Efficient Pricing: Market coupling ensures the cheapest available power is dispatched first across the entire grid.
3. Reduced Arbitrage: Eliminates price differences between exchanges, preventing inefficiencies.
4. Regulatory Pass-Through: Over time, CERC and state regulators can factor these systemic savings into future tariff orders .

While household tariffs are regulated and may see gradual impact, large industrial and commercial consumers who buy directly from exchanges could see faster, more direct savings.

Market Coupling: The Game-Changer

Market coupling is the cornerstone of this reform. Today, each power exchange operates its own auction system, leading to different prices for the same hour of electricity on different platforms.

Under market coupling, a central algorithm—managed by the Power System Operation Corporation (POSOCO)—will simultaneously match supply and demand across all

This system is already used in Europe and has proven to reduce price volatility and increase liquidity. In India, it promises to unlock the full potential of the national grid.

India’s Fragmented Power Trading Landscape

Before these reforms, India’s short-term power market was inefficient:

• DISCOMs often paid different prices for identical power based on which exchange they used.
• Generators had to list on multiple platforms to maximize reach.
• Price discovery was opaque, and smaller players struggled to compete.

This fragmentation added hidden costs that ultimately trickled down to consumers. Market coupling aims to end this by creating a truly unified national electricity market.

Who Benefits? Consumers, DISCOMs, and Industry

The ripple effects of this reform are wide-reaching:

• DISCOMs: Lower procurement costs improve their strained finances, reducing the need for government bailouts.
• Industries: Manufacturing and IT sectors get access to more predictable, competitive power rates—boosting competitiveness.
• Households: While indirect, long-term tariff stability and potential reductions are on the horizon.
• Renewables: A liquid, transparent market makes it easier for solar and wind producers to sell surplus power.

Challenges and Implementation Timeline

Despite the promise, hurdles remain:

• Technical integration of three independent exchanges
• Resistance from stakeholders benefiting from the current fragmented system
• Need for robust IT infrastructure and real-time data sharing

According to official sources, the market coupling mechanism is expected to go live in phases starting mid-2025, with full implementation targeted by early 2026 .

Conclusion: A More Efficient Grid, Fairer Prices

The CERC’s move to review trading fees isn’t just about saving a few paise—it’s a strategic step toward modernizing India’s electricity market. By aligning with the global best practice of market coupling, India is paving the way for a future where lower electricity prices are not a political promise, but a natural outcome of efficiency and transparency. For the average consumer watching their monthly bill, that future can’t come soon enough.

Sources

• Times of India: “Lower electricity prices? CERC reviews power trading fee to ease cost” .
• Central Electricity Regulatory Commission (CERC) Draft Regulations on Trading Fees, 2025 .
• Ministry of Power – National Electricity Policy Updates .
• POSOCO (Power System Operation Corporation) Market Coupling White Paper .
• Central Electricity Regulatory Commission – Official Website .
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• [INTERNAL_LINK:how-electricity-tariffs-are-set-in-india]