Draft Indian Electricity Bill 2025 (Amendment)

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🏛️ Overview of the Draft Electricity (Amendment) Bill, 2025

The Electricity (Amendment) Bill, 2025 seeks to revise the Electricity Act, 2003 to address persistent challenges in India’s power sector and align it with the country’s developmental vision of “Viksit Bharat @ 2047.” The amendments aim to improve financial sustainability, promote clean energy, enhance regulatory accountability, and support industrial competitiveness.

🔑 Key Objectives of the Amendment

  1. Ensure financial viability of distribution companies (DISCOMs)
  2. Promote cost-reflective tariffs
  3. Enable open access and competition
  4. Support clean energy transition
  5. Strengthen regulatory institutions
  6. Improve ease of living and doing business

⚡ Major Amendments and Their Implications

1. Financial Viability and Tariff Rationalization

  • Cost-Reflective Tariffs: Regulatory Commissions must now determine tariffs that reflect the actual cost of electricity supply. This aligns with the Supreme Court’s 2025 judgment (BSES Rajdhani Power Ltd. vs. Union of India), which emphasized financial sustainability.
  • Advance Subsidy Mechanism: State Governments can continue subsidizing specific consumer categories, but must do so transparently and in advance.
  • Suo Motu Tariff Determination: If utilities delay filing tariff petitions, Commissions can determine tariffs on their own to ensure timely implementation from April 1 each year.

Impact: These measures aim to reduce DISCOM losses (₹6.9 lakh crore as of 2025), improve service quality, and attract investment.

2. Industrial Competitiveness and Open Access

  • Exemption from Universal Service Obligation (USO): Distribution licensees may be exempted from supplying electricity to consumers with demand above 1 MW, allowing such consumers to procure power via open access.
  • Supply of Last Resort: In case of failure of alternate arrangements, a designated licensee will ensure uninterrupted supply.
  • Cross-Subsidy Elimination: Manufacturing enterprises, Railways, and Metro systems will be exempt from cross-subsidies within five years.

Impact: These reforms reduce industrial tariffs, boost MSME growth, and lower logistics costs, enhancing India’s global competitiveness.

3. Captive Generation and Energy Storage

  • Captive Generation Rules: Central and State Governments are empowered to define eligibility criteria and rules for captive power plants.
  • Energy Storage System (ESS): Defined as systems that store and release electricity, ESS is now formally recognized as part of the power system.

Impact: Encourages self-generation, improves grid stability, and supports renewable integration.

4. Clean Energy Transition

  • Market-Based Mechanisms: CERC is empowered to introduce instruments like contracts for difference to promote renewable capacity addition.
  • Non-Fossil Energy Mandates: SERCs must specify minimum purchase obligations for non-fossil energy, aligned with Central Government targets.
  • Penalty for Non-Compliance: Entities failing to meet renewable purchase obligations (RPOs) will face penalties between ₹0.35–₹0.45 per kWh.

Impact: Accelerates renewable adoption and ensures enforceable clean energy targets.

5. Ease of Living and Consumer Protection

  • Minimum Service Standards: Central Government will prescribe nationwide benchmarks for electricity service quality.
  • Cap on Unauthorized Use Assessment: Assessment period for unauthorized electricity use is capped at 12 months.
  • Appeal Deposit Relaxation: Deposit for appeals reduced from 50% to 33% of assessed amount; can be waived in cases of hardship.

Impact: Enhances consumer rights, reduces arbitrary penalties, and improves service delivery.

6. Regulatory Strengthening

  • Expanded Grounds for Removal: Members of CERC and SERCs can be removed for willful violation or gross negligence.
  • Time-Bound Adjudication: Regulatory Commissions must dispose of cases within 120 days, with reasons recorded for delays.
  • Increased APTEL Capacity: Number of members in the Appellate Tribunal for Electricity (APTEL) increased from 3 to 7 to reduce backlog.

Impact: Improves regulatory accountability, transparency, and investor confidence.

7. Infrastructure and Legal Clarity

  • Right of Way (RoW): Provisions from the repealed Telegraph Act are now incorporated into the Electricity Act to ensure legal continuity for laying electric lines.
  • Electric Line Authority: A new authority is defined to manage electric line placement and maintenance, with clear powers and dispute resolution mechanisms.
  • Shared Distribution Networks: Multiple licensees can share infrastructure, reducing duplication and capital waste.

Impact: Streamlines infrastructure development and reduces costs.

8. Cybersecurity and Digital Resilience

  • CEA Empowered: Central Electricity Authority (CEA) will specify cybersecurity requirements for integrated power systems.

Impact: Protects critical infrastructure from cyber threats in an increasingly digitalized power sector.

9. Institutional Reforms

  • Electricity Council: A new high-level body chaired by the Union Power Minister, with State Ministers as members, will advise on policy and coordinate reforms.

Impact: Promotes cooperative federalism and unified policy implementation.

📊 Comparative Analysis

The Bill includes a detailed comparative table showing existing provisions vs. proposed amendments, with justifications. Key highlights include:

  • Replacement of outdated references (e.g., Planning Commission → NITI Aayog)
  • Clarification of definitions (e.g., ESS, Manufacturing Enterprise)
  • Empowerment of regulatory bodies and governments to frame rules for new provisions

🧭 Strategic Alignment

The amendments are strategically aligned with:

  • National Logistics Policy
  • Energy Conservation Act
  • Telecommunications Act, 2023
  • Supreme Court Judgments
  • India’s Net-Zero and Renewable Energy Goals

📝 Conclusion

The Electricity (Amendment) Bill, 2025 represents a transformative step toward modernizing India’s power sector. By addressing long-standing financial, regulatory, and infrastructure challenges, it lays the foundation for a resilient, competitive, and clean energy future. The Bill balances consumer protection with industrial growth, regulatory efficiency with legal clarity, and national goals with local implementation.

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Note: Please share your comments and suggestion on the same, to make the bills effective which can be incorporated in the "Electricity Act 2003"

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Attachments:

Draft Indian Electricity Bill, 2025

Location: India

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