The Central Electricity Regulatory Commission (CERC) has issued draft amendments to the Power Market Regulations, 2021, proposing a framework for implementing market coupling across power exchanges.

The draft Power Market (Second Amendment) Regulations, 2026, set out the institutional structure and operational framework for market coupling and price discovery in the power market.

Stakeholders can submit their comments and suggestions by May 16, 2025.

Under the proposed amendments, the Grid Controller of India (Grid India) will function as the Market Coupling Operator (MCO) and will be responsible for the operation and management of market coupling. The agency will establish a separate cell to discharge these functions.

The draft introduces a definition for the Power Market Coupling Procedure (PMCP), which will serve as the detailed procedure for implementing market coupling.

Price discovery will be undertaken by the MCO from a date to be notified by the Commission. Until such notification, power exchanges will continue to carry out price discovery.

Market coupling will apply to the Day-Ahead Market (DAM), Real-Time Market (RTM), and other market segments from dates to be notified by the Commission. Different implementation timelines may be specified for different market segments.

Power exchanges will continue to collect bids from market participants in a uniform format in accordance with the PMCP. These bids, after validation and anonymization, will be transmitted to the MCO through secure channels within the timelines specified in the procedure. The MCO will aggregate bids received from all exchanges for each market segment to facilitate price discovery.

The draft provides that price discovery will be based on the principle of maximization of economic surplus, defined as the sum of buyer and seller surplus. In an unconstrained system, a uniform market-clearing price will be determined for all cleared transactions. In the event of transmission congestion, market splitting will be applied.

Grid India has been tasked with formulating the PMCP, with the Commission’s approval, within six months of the amendments’ notification. The procedure will cover the roles and responsibilities of the MCO, power exchanges, and the National Load Despatch Centre; the operational sequence and timelines for market coupling sessions; bid submission formats and data handling protocols; features of the price discovery algorithm; and processes for scheduling, settlement, and handling operational constraints or delays.

The draft also provides that select regulatory provisions applicable to power exchanges under the principal regulations will extend to the MCO.

The CERC’s move follows a February 2026 ruling by the Appellate Tribunal for Electricity, which dismissed a petition filed by the Indian Energy Exchange challenging the Commission’s directions on market coupling.

The tribunal held that the Commission had only initiated the process and that implementation would require a separate regulatory framework. The present draft amendments set out that framework by defining the roles, processes, and procedures for market coupling.

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