Sole MCO plan gets pushback from Grid India, IEX, Pg13

Key Highlights:

• The Central Electricity Regulatory Commission (CERC) proposed designating Grid Controller of India (Grid India) as the sole Market Coupling Operator (MCO) in its draft regulations of April 2026.
• Grid India supported the proposal but recommended a steering committee and a regulatory fallback mechanism to address potential single points of failure.
• The Indian Energy Exchange (IEX), which holds over 90% market share among power exchanges, opposed the draft regulations.
• Market coupling aims to establish a uniform electricity price across all power exchanges by aggregating bids.

Detailed Insights:

• The CERC's draft regulations, the CERC (Power Market) (Second Amendment) Regulations, 2026, marked a shift from its earlier July 2025 order, which proposed power exchanges acting as MCOs on a rotational basis.
• Grid India, a state-owned entity, emphasized that while a sole MCO simplifies implementation, it creates a single point of failure, citing technical issues in European markets as a precedent.
• To mitigate risks, Grid India suggested a steering committee comprising CERC, all power exchanges, Grid India, and external auditors, drawing inspiration from the successful European round-robin implementation model.
• The proposed market coupling mechanism, first introduced under CERC's Power Market Regulations, 2021, seeks to improve price discovery, reduce price disparities, and enhance overall market efficiency and stability.
• Concerns were also raised regarding a potential conflict of interest as Grid India's roles in transmission planning, system operations, and market operations would be consolidated under one umbrella.
• India currently operates with three power exchanges regulated by CERC: IEX, Power Exchange India Ltd (PXIL), and Hindustan Power Exchange Ltd (HPX).

Key Concepts Involved:

• Market Coupling Operator (MCO): An entity responsible for aggregating bids from all power exchanges and determining a uniform market-clearing price for electricity.
• Market Coupling: A mechanism in electricity markets that pools bids from all power exchanges to discover a single, uniform market-clearing price, aiming for efficiency and transparency.
• Central Electricity Regulatory Commission (CERC): A statutory body and key regulator of the Indian power sector, established under the Electricity Act, 2003, responsible for regulating tariffs and promoting competition.
• Grid Controller of India (Grid India): The national grid operator, a wholly-owned central government enterprise under the Ministry of Power, responsible for the integrated operation of the Indian Power System, including operating the National Load Despatch Centre (NLDC) and Regional Load Despatch Centres (RLDCs).