“Market Coupling – IEX presented a strong argument at the last APTEL hearing, and we see a reasonable chance that APTEL calls for a reevaluation of the timing of market coupling – which could be temporarily positive,” Bernstein said. However, the brokerage warned that any delay in the link could reopen a more damaging debate. “If the tie-up is rejected, we see high chances of a transaction cost discussion paper proposing a reduction in basic industry benchmarks and ROE standards. This is the biggest reason for our underperformance.”On operational momentum, the brokerage struck a more constructive tone, saying volumes “should remain supportive with good coal availability and even some renewable plants may be forced to sell on the exchange,” it said.
IEX shares rise as framework for tribunal questions
Despite Bernstein’s caution, IEX shares have risen sharply this week. The stock closed 4.5% higher at Rs 154.75 on the BSE on Wednesday, January 7, extending its gains over the past two sessions to around 15%.
On Tuesday, the shares rose 9.3% to close at Rs 146.80 after touching an intraday high of Rs 153.35 as investors’ attention turned to developments in the market linkage case before the Electricity Appellate Tribunal (APTEL).
During hearings on petitions challenging the Central Electricity Regulatory Commission’s (CERC) proposed market linkage framework, APTEL raised pointed questions about how the rules were formulated. The tribunal noted that the regulator should have acted independently in establishing the framework and flagged concerns about what it described during the trial as excessive theatrics, emphasizing that the regulator must remain above suspicion.
APTEL set January 9 as the next hearing date after counsel requested additional time. Reports also indicate that the tribunal has informed CERC that if it signals a possible revocation of the order, the case may be closed on Friday.
Volumes are rising, prices are falling
In addition, IEX reported stable operating performance for the December quarter. In its Q3 2026 business update published on Monday, the exchange said traded electricity volumes, excluding TRAS, increased 11.9% year-on-year to 34.08 billion units.
During the quarter, improved hydro and wind power supply, together with steady coal-fired generation, provided greater supply liquidity on the exchange platform, contributing to softer energy prices in key segments.
The market clearing price in the Day-Ahead market averaged Rs 3.22 per unit in the third quarter of FY26, down 13.2% from the same quarter last year. The Real-Time Market Clearing Price averaged Rs 3.26 per unit, down 11.6% year-on-year.
Also read: Stock market valuation becomes favorable after five years, revaluation ahead: Morgan Stanley
For the time being, the market’s focus remains on the outcome of the market coupling case. However, Bernstein’s assessment reflects that even if legal relief comes in the short term, the broader regulatory debate, particularly around transaction costs and returns, will continue to cast a long shadow over the investment opportunities for Indian Energy Exchange.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)
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