Draft Electricity (Amendment) Bill 2025 Targets Tariff Reform and Power Sector Overhaul
The Draft Electricity (Amendment) Bill, 2025 aims to overhaul India’s power sector framework by mandating cost-reflective tariffs, strengthening regulatory oversight, promoting renewable energy adoption, and improving ease of doing business while safeguarding consumer welfare, stated Union Minister for Power, and Housing and Urban Affairs Manohar Lal.
December 22, 2025. By Mrinmoy Dey
He highlighted that the provisions in the Bill have been proposed to mandate cost-reflective tariffs and to empower Commissions to act suo-motu when utilities delay tariff filings. He clarified that State Governments may continue to provide subsidies to priority consumer groups such as domestic and agricultural consumers and there may not be any increase in cost for such consumers. This ensures that financial discipline and consumer welfare go hand in hand.
The Bill also seeks to enhance the economic competitiveness of the Indian industry. By reducing distortions caused by cross-subsidies and surcharges, the Bill aims to support Indian industry, including MSMEs, to grow, expand employment, and compete globally. He emphasised the need to make the cost of electricity reasonable for the industries for the benefit of all the citizens in the country.
The Bill also proposes to empower SERCs, in consultation with the State Government, to exempt DISCOMs from the obligation to supply large consumers. These consumers can procure power at competitive rates from other sources. At the same time, the fixed cost burden on DISCOMs associated with supplying electricity to these consumers will be reduced. This will benefit smaller consumers. He clarified that the large consumers will have a choice to exit after giving notice with a reasonable time.
He also noted that supporting the increased use of electricity from non-fossil sources is a collective responsibility. A minimum obligation for the use of non-fossil source electricity is proposed under the Bill. To ensure the availability of cost-competitive and adequate renewable energy, it is proposed that capacity addition will also be enabled through market mechanisms in addition to through agreements by the DISCOMs, which will also reduce the burden on DISCOMs.
He also informed that the Government is committed to enhancing ease of living and ease of doing business. The Bill proposes provisions to ensure better service for the general public, reduce financial and compliance burden, and create a better environment for business. To strengthen regulatory governance, several provisions have been proposed under the draft Bill. The draft Bill also proposes to expand the strength of APTEL to handle increasing case loads.
The Bill includes important operational reforms, such as incorporating Right-of-Way provisions directly in the Act. The Bill also proposes enabling distribution network sharing to avoid duplication. He emphasised that by allowing the sharing of the network, the consumers will benefit. He clarified that the apprehensions about privatisation and an increase in cost or adverse effect on employees have no basis. Suitable regulatory and policy measures will be taken to ensure that there will not be any adverse effect on any class of consumers or employees, asserted Lal.
The Bill envisages the establishment of the Electricity Council to foster cooperative federalism and national consensus on power sector reforms. The minister assured that the Central Government will take necessary steps for reasonable compensation to farmers for their land used for laying of electric lines. He informed the members that the Ministry of Power has already issued guidelines for the determination of compensation linking it to the market rate.
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