The Electricity (Amendment) Bill, 2025 marks one of the most important reform efforts in India’s power sector in recent years. Designed to fix long-standing inefficiencies, improve competition, and ensure reliable electricity for all, the bill aims to transform how power is distributed, priced, and regulated across the country.
Key Objectives of the Bill
The reform focuses on six major goals:
- Cost-reflective tariffs that mirror the actual cost of electricity supply
- Reduced cross-subsidies, especially for industrial and transport sectors
- Full protection for farmers and low-income consumers, keeping subsidised tariffs intact
- Improved regulatory accountability and quicker decision-making
- Shared use of distribution networks to cut duplication and costs
- Better supply reliability and Centre-State coordination
Major Reforms Introduced
1. Competition in Distribution
The bill ends the single-license monopoly by allowing multiple distribution companies to operate in the same area.
Every licensee must meet a Universal Service Obligation, ensuring equal access for all consumers.
2. Tariff & Cross-Subsidy Reform
Tariffs must now be cost-based, improving financial stability of DISCOMs.
Cross-subsidies for sectors like manufacturing, metro rail, and railways will be removed within five years.
3. Network Efficiency
Regulatory commissions will determine wheeling charges, promoting fair use of shared networks.
Energy Storage Systems (ESS) are formally recognised as essential power sector infrastructure.
4. Strengthened Governance
The bill establishes an Electricity Council for Centre–State coordination.
State regulators gain stronger powers to impose penalties and issue suo motu tariff orders.
5. Clean Energy & Market Reforms
It pushes for greater non-fossil fuel obligations and encourages new power-market platforms, improving procurement efficiency.
Why the Reform Was Necessary
DISCOMs face chronic financial stress due to:
- High AT&C losses
- Inefficient billing
- Monopoly-driven poor service quality
- Excessive industrial tariffs to fund subsidies
The new bill aims to build a competitive, financially stable, and clean-energy-aligned power sector capable of supporting India’s growth and net-zero targets.
