Market coupling is said to have the potential to reduce market fragmentation, increase economic surplus and lead to uniform price discovery by definition. However, the staff paper points out several areas of ambiguity and potential risks in coupling the power exchanges. Structural changes to the most mature and efficient segment of the power exchanges can be irreversible and disruptive. Therefore, we need more discussions and clarity on the issues before proceeding. Until we have clarity on many aspects, market coupling should not be introduced and the three exchanges should be allowed to operate independently.

In the meantime, it is important to deepen and broaden short-term transactions on the power exchanges. To increase liquidity, we suggest that:

• CERC introduce a provision in the Power Market Regulations that any Power Exchange has to maintain a market share of at least 20% in either DAM or TAM segment each year after the first two years of operation. Otherwise, the exchange will have to close or merge with other exchanges.
• CERC and Power exchanges initiate deliberations towards standardising bid event timelines and durations across exchanges, especially for reverse auctions to reduce the number of events for sellers to participate in.
• All short-term market transactions are conducted on the power exchanges and the DEEP for short-term transactions is phased-out. The DEEP portal can focus on transparent bidding for medium-term contracts.
• CERC, along with exchanges, can consider introducing forward auctions for generators in the Term Ahead Segment. Over time, the PuSHP portal can be phased out with this proposed forward auction contract.
• The Forum of Regulators can deliberate adoption of provisions in the IEGC, 2023 in state grid codes to enable sale of URS as stipulated in Rule 9 of the Late Payment Surcharge Rules, 2022.
• CERC can initiate deliberations on collective transactions for longer-term horizons. Perhaps availability of such contracts under collective transactions will also initiate longer-term planning processes among DISCOMs and generators.