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CERC Overhauls Power Trading Contracts to Curb Price Manipulation and Improve Transparency

The Central Electricity Regulatory Commission (CERC) has issued sweeping reforms to India's power trading landscape, targeting contract design, trading methods, and transparency. Triggered by persistent price deviations in Day-Ahead Contingency (DAC) contracts and concerns of market fragmentation, CERC's intervention aims to curb manipulation and restore integrity to short-term power markets.

Key directives include discontinuation of user-defined delivery slots and a mandate to standardize contract types such as round-the-clock (RTC), peak, off-peak, and night blocks. This move addresses the fragmentation and liquidity dilution caused by overly flexible Term Ahead Market (TAM) contracts.

CERC has also restructured Any-Day Single Sided (ADSS) contracts by capping bid windows, enforcing stricter timelines, and requiring declaration of duplicate bids across exchanges to prevent capacity blocking and speculative behavior. Furthermore, the DAC price discovery model will transition from continuous matching to a uniform price-step auction to promote fairness and transparency.

While intra-day contracts are retained due to their operational value, CERC has directed standardization of delivery timelines and discontinuation of dynamic contracts by Power Exchange India.

In a broader push for accountability, exchanges must now disclose both bid volumes and traded quantities. These reforms aim to create a more reliable, liquid, and competitive market, supporting India's evolving grid needs amid rising renewable integration.