Electricity (Amendment) Bill 2025 Proposes Sweeping Power Sector Reforms: Govt

New Delhi, Jan 31 (KNN) The Central Government has proposed wide-ranging reforms in the power sector through the draft Electricity (Amendment) Bill, 2025, aimed at improving financial sustainability, enhancing competition, strengthening regulatory accountability and accelerating the transition to non-fossil fuel–based electricity generation.

This information was provided by the Minister of State in the Ministry of Power, Shripad Naik, in a written reply to the Lok Sabha.

According to the Ministry, the proposed amendments are aligned with the long-term vision of Viksit Bharat at 2047 and seek to address structural challenges facing the electricity sector.

Focus on Financial Viability

A key objective of the Bill is to restore the financial health of distribution licensees, which the government said is essential for ensuring reliable and affordable power supply. The draft legislation proposes cost-reflective tariffs and empowers electricity regulatory commissions to determine tariffs suo motu, effective from April 1 each year, to prevent delays in tariff revisions.

The government noted that high industrial tariffs, cross-subsidisation and rising power procurement costs have adversely affected industrial competitiveness. The proposed reforms aim to rationalise tariffs, reduce costs, unlock latent demand and improve productivity, thereby enhancing India’s global competitiveness.

Accelerating Energy Transition

To support India’s target of achieving 500 GW of non-fossil fuel capacity by 2030, the Bill proposes empowering the Central Electricity Regulatory Commission (CERC) to introduce market-based instruments to attract investment and speed up renewable energy capacity addition. Enforceable non-fossil energy obligations have also been proposed to align the Electricity Act with the Energy Conservation Act.

The amendments propose uniform national standards of service to improve quality of supply and strengthen accountability. Consumer-friendly provisions include limiting assessments for unauthorised electricity use to one year and lowering the pre-deposit requirement for appeals, aimed at reducing compliance burden and disputes.

Strengthening Regulation and Adjudication

To improve regulatory efficiency, the draft Bill allows governments to refer complaints against members of the Central and State Electricity Regulatory Commissions, with expanded grounds for removal. A 120-day timeline has been proposed for adjudicatory decisions, while the strength of the Appellate Tribunal for Electricity (APTEL) is proposed to be increased to address pendency of cases.

The Bill proposes transitioning powers related to the installation and maintenance of electric lines from the repealed Telegraph Act, 1885 to the Electricity Act, 2003, with States required to frame compensation frameworks. To reduce network duplication and costs, distribution licensees may be permitted to supply electricity through shared networks, subject to regulatory approval.

Applicability and Subsidies

Once enacted, the provisions of the Electricity (Amendment) Bill, 2025 will apply uniformly across all States, including Maharashtra. The Ministry clarified that subsidies for specified consumer categories, including tribal households, may continue to be provided transparently by State Governments under Section 65, without undermining the financial sustainability of the power sector.

The draft Bill was placed in the public domain on 9 October 2025 for stakeholder comments. The Ministry said the legislation is currently at the consultation stage, with extensive engagement underway across various stakeholder groups.

(KNN Bureau)