The Appellate Tribunal for Electricity (APTEL) has dismissed an appeal filed by the Indian Energy Exchange (IEX) against the Central Electricity Regulatory Commission’s (CERC) initiation of the process for market coupling in the Day Ahead Market (DAM) on the power exchanges.

It held that the CERC had, on July 23, 2025, held that the directions merely initiated the process for implementing market coupling and did not, by themselves, operationalize it.

The Tribunal emphasized that under Regulation 39 of the Power Market Regulations, 2021, ‘Market Coupling’ can only come into effect after separate regulations are framed and notified by CERC.

The Tribunal clarified that it lacked jurisdiction to direct CERC either to frame or refrain from framing regulations.

Further, APTEL found that the power exchanges, including the appellant, IEX, continued to operate as before, and the directions only indicated a future expectation of market coupling.

Background

The dispute arose from CERC’s order directing the implementation of market coupling under the 2021 regulations.

In 2024, the CERC had authorized a shadow pilot on power systems and cost optimization through market coupling across various segments of all three energy exchanges – IEX, Power Exchange India, and Hindustan Power Exchange.

Grid-India subsequently submitted reports dated January 16, 2025 (based on 29 months of data) and June 30, 2025 (covering a four-month D+1 run from December 2024 to March 2025)

Based on these reports, CERC had favored implementing market coupling in DAM in a phased manner.

IEX challenged the order on multiple grounds. It argued that the earlier findings of insignificant economic gains of less than 0.013% did not justify implementation.

It also contended that the 29-month report showed negligible gains and that the decision relied selectively on a four-month report showing only 0.3% economic surplus.

A major point of the challenge was concerning the timing of CERC’s decision. The Securities and Exchange Board of India (SEBI) recorded unusual trades and profits amounting to approximately ₹1.73 billion (~$19.11 billion) in IEX’s shares around the announcement of market coupling.

IEX argued that these developments raised questions on the entire decision-making process and tainted the impugned order.

Commission’s Analysis

APTEL examined whether the July 23, 2025, proceedings constituted a final order or were part of the regulation-making exercise.

It noted that the proceedings were issued suo motu.

The Tribunal observed that it had clearly stated that provisions relating to market coupling would come into effect only after separate regulations are specified.

Therefore, the earlier directions were not the final regulations.

On the issue of consequences, APTEL held that mere apprehension of business loss did not confer the status of a ‘person aggrieved.’ Since the appellant continued to operate as before, the appeal was premature.

APTEL considered SEBI’s observation that the implementation of the market coupling mechanism was expected to negatively affect trading volume on IEX in the DAM segment. A preliminary examination further revealed significant price and volume movements in the IEX scrip the day after the CERC order.

However, with regard to SEBI’s concerns, APTEL considered the allegations of insider trading and the impounding direction of ₹1.73 billion (~$19.11 billion), but found that these issues did not, at this stage, invalidate CERC’s regulatory directions.

The Tribunal added that it is appropriate that, until the proceedings initiated by SEBI and by the CERC itself are concluded, the officers referred to in the interim order of SEBI dated October 15, 2025, be kept away from the regulation-making exercise with respect to market coupling.

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