The Supreme Court has allowed the Central Electricity Regulatory Commission (CERC) to continue framing regulations for market coupling, dismissing a challenge filed by the Indian Energy Exchange (IEX) against the proposed framework. The court, however, clarified that it had not expressed any opinion on the merits of the dispute and said objections could be raised after the regulations are formally notified.
A Bench comprising Justice P.S. Narasimha and Justice Alok Aradhe observed that the matter was premature, as the regulatory framework for market coupling has not yet been finalised. During the hearing, CERC informed the court that the regulations are expected to be notified within four to six weeks, allowing the regulator to proceed with the rule-making process.
The proposed market coupling mechanism seeks to pool buy and sell orders from all electricity exchanges to determine a single market-clearing price, replacing the current system where each exchange independently discovers prices. According to CERC, the framework is aimed at improving price discovery, enhancing transparency, and increasing efficiency in electricity trading.
The decision comes as a setback for IEX, which had argued that the existing exchange-based model has played a key role in developing India’s electricity market and that market coupling could adversely impact competition and market efficiency. Following the court’s order, IEX shares declined 3.67%, closing at ₹127.35 on the BSE.
The legal dispute originated from CERC’s order proposing the phased implementation of market coupling in the Day-Ahead Market (DAM), where electricity is traded one day before delivery. The regulator had proposed a shadow pilot before full implementation and suggested a rotational arrangement under which different power exchanges would serve as the market coupling operator.
IEX had challenged the proposal before the Appellate Tribunal for Electricity (APTEL), contending that the regulator’s decision was arbitrary and lacked adequate justification. During earlier proceedings, APTEL emphasised the importance of transparency and regulatory independence while noting CERC’s assurance that market coupling would not be implemented until a comprehensive regulatory framework was in place.
With the Supreme Court declining to intervene at this stage, the focus now shifts back to the regulatory process. Once the regulations are notified, stakeholders, including IEX, will have the opportunity to challenge specific provisions if required.
India currently has three power exchanges—Indian Energy Exchange (IEX), Power Exchange India Ltd. (PXIL), and Hindustan Power Exchange (HPX)—which facilitate electricity trading across multiple market segments, including the day-ahead and real-time markets. The outcome of the market coupling framework is expected to shape the future of electricity price discovery and power market operations in the country.
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