The Electricity (Amendment) Bill, 2025, is a major step toward transforming India’s power system to meet the needs of a rapidly growing economy. It aims to create a future-ready electricity sector that delivers reliable, affordable, and high-quality power to every consumer: farmers and households, to shops and industries.
The Bill moves away from the old monopoly supply model and encourages a performance-driven approach, where both public and private utilities compete fairly to improve consumer service. It promotes better use of the existing electricity network with transparency and accountability so that citizens get more value for every rupee spent.
Importantly, the reforms fully protect subsidised tariffs for farmers and low-income households. By providing a platform for the Centre and States to work together, it gives a big role to the states in shaping policies. More than just an update, this Bill is a blueprint for a modern, efficient, and resilient power sector.
It aligns with India’s developmental aspirations, from farmers to industries. The bill supports the country’s vision of Viksit Bharat 2047, supporting India’s long-term economic growth.
Electricity is more than a utility today—it is the backbone of a nation aspiring to become a global economic powerhouse. From industries that run 24×7, to the farmer whose irrigation pump keeps his land alive, to the small shopkeeper who depends on uninterrupted supply, reliable electricity defines the quality of life and productivity in every corner of India. And yet, despite decades of reforms, the power sector has remained tangled in inefficiencies, financial distress, and outdated structures.
The Electricity (Amendment) Bill, 2025 enters this landscape as a bold attempt to reform not just procedures, but the very architecture of how power is distributed, priced, and governed in India. Rather than merely tweaking the existing system, the Bill tries to shift the sector towards a future-ready model: one that is competitive, consumer-centric, financially robust, and aligned with India’s ambition of becoming a developed nation by 2047.
As I read through the Bill and the conversations around it, one thought kept returning to me: Reform in the electricity sector is not only about kilowatts and tariffs—it is about India’s growth story itself.
A Bill Built for a Modern Economy
At its heart, the Electricity (Amendment) Bill, 2025 aims to correct structural problems that have long held back India’s power system. It seeks to move the sector away from the traditional monopoly model, where one distribution company (or “discom”) serves an entire region. This system, as many consumers know, often leaves no room for choice—whether the consumer is a farmer, a household, or a manufacturing unit.
Under the new framework, both public and private distributors will be allowed to operate in the same area, sharing a common network. This is called “regulated competition”, meaning that companies compete on service quality and efficiency while the government regulates the infrastructure and prevents duplication.
Why is this necessary? Because competition, when fairly regulated, pushes every distributor to deliver better service. Slow repairs, billing errors, voltage fluctuations, and maintenance delays—issues many of us take for granted—are less likely to continue in a system where consumers have alternatives.
At the same time, the Bill ensures that subsidised tariffs for farmers and low-income households remain fully protected. This is an important reassurance—reform does not mean making electricity unaffordable for the vulnerable. Instead, the Bill tries to ensure that subsidies are transparent, budgeted, and directly paid, rather than hidden inside inflated industrial tariffs.
Why Reform Was Urgent: A Crisis Hiding in Plain Sight
To appreciate the significance of this legislation, we must understand the challenges currently crippling India’s power distribution system.
For decades, distribution companies (discoms)—which deliver electricity to end consumers—have been struggling under growing financial stress. The reasons are well known:
1. High AT&C Losses
AT&C (Aggregate Technical & Commercial) losses refer to electricity lost during transmission and distribution or not billed correctly. In some states, these losses exceed 20–25%, meaning a big chunk of power generated is never paid for. This is one of the biggest sources of financial waste.
2. Poor Billing and Revenue Collection
Even when electricity is consumed, inefficiencies in billing and collection mean that discoms often recover less than what they supply.
3. Cross-Subsidy Distortions
Industrial and commercial consumers pay inflated electricity tariffs so that households and farmers can receive subsidised rates.
While protecting vulnerable households is essential, the hidden cross-subsidy has become so heavy that it significantly increases the cost of manufacturing in India, weakening our competitiveness in global markets.
The Electricity (Amendment) Bill directly addresses these challenges by promoting cost-reflective tariffs, meaning tariffs that honestly reflect the cost of supplying power. This does not eliminate subsidies; it merely ensures that subsidies are paid transparently from government budgets, rather than being loaded onto industries.
For industrial consumers—especially manufacturing, railways, and metro rail—the Bill envisions elimination of cross-subsidies within five years. This could dramatically improve India’s logistics and industrial costs, making “Make in India” even more competitive.
A Better Way to Share the Network
One of the most technical but transformative aspects of the Bill is the promotion of shared networks. Instead of forcing new companies to build duplicate electricity lines—something that would be costly, wasteful, and environmentally damaging—the Bill proposes a model where all distributors use the same wires laid by the existing utility.
This is similar to India’s highly successful Inter-State Transmission System (ISTS). Under the ISTS, both public and private companies build transmission lines, and the Central Electricity Regulatory Commission (CERC) monitors their operation. Users pay transmission charges, which are distributed among providers in a fair and regulated manner.
This model has shown that shared infrastructure can be cost-effective, reliable, and transparent. By applying a similar principle to local distribution networks, the Bill avoids unnecessary duplication and ensures that improvements benefit all users.
· clear authority to determine cost-reflective wheeling charges
(the fees paid for using a distributor’s network),
· powers to penalise non-compliance,
· and the ability to declare tariffs suo moto if utilities delay filing applications.
This greater clarity and accountability helps prevent financial distress and creates an investment-friendly environment, something India urgently needs as it expands renewable energy, storage systems, and smart grids.
The Bill also creates a new Electricity Council, a platform where the Centre and States can coordinate policies and resolve differences. This is crucial because electricity is a concurrent subject—both levels of government have responsibilities, and coordinated policy-making is essential.
Universal Service Obligation (USO): Ensuring No One Is Left Behind
Every distributor, whether public or private, must ensure Universal Service Obligation—meaning they must provide access to all households in their area, without discrimination. This is a powerful safeguard for rural consumers, small towns, and low-income neighbourhoods.
For large industrial consumers (those eligible for open access, generally above 1 MW load), SERCs can relax this obligation. This gives industries the flexibility to choose their suppliers while ensuring households remain protected.
Encouraging Clean Energy and Storage
A modern electricity system must be compatible with India’s climate goals. The Bill therefore:
· strengthens obligations for non-fossil energy procurement,
· introduces provisions for Energy Storage Systems (ESS),
· and imposes penalties for non-compliance with renewable obligations.
Energy storage will play a central role in the future—balancing solar and wind power and ensuring stability in the grid. The Bill formally recognises and defines the place of storage systems in the electricity ecosystem.
Legal and Operational Clarity: The Backbone of a Modern System
For smooth implementation, the Bill updates important legal definitions and references, such as aligning them with the Companies Act of 2013. It also expands the scope and authority of the Electric Line Authority, giving it powers equivalent to those of the Telegraph Authority under the Indian Telegraph Act of 1885.
This matters for practical reasons: it helps streamline land acquisition, compensation, dispute resolution, and coordination with local bodies—processes that often delay infrastructure projects.
A Step Toward Viksit Bharat 2047
If India is to become a developed nation by 2047, our electricity system must expand and modernise at an unprecedented scale. The Electricity (Amendment) Bill, 2025 may not solve every challenge overnight, but it provides a strong foundation.
By promoting competition, reducing distortions, empowering regulators, encouraging renewables, and protecting the poorest consumers, the Bill balances growth with equity.
It is, in many ways, an attempt to rewire India’s power sector for the decades ahead.
As someone who has closely followed India’s developmental policies, I believe this is more than just a legislative amendment—it is a statement of intent. It reflects a vision of a confident India, one that recognises that reliable electricity is not a privilege but a necessity for every citizen and an engine for national growth.
If implemented with care, transparency, and collaboration between states and the Centre, the Electricity (Amendment) Bill, 2025 could illuminate the path to a more efficient, financially healthy, and future-ready power system—one worthy of a rising India.
The article is based on the inputs and background information provided by the Press Information Bureau (PIB) Author is Writer, Policy Commentator. He can be mailed at kcprmijk@gmail.com
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