India Proposes Significant Reforms in Power Sector with New Bill
The Central Government of India has unveiled a draft of the Electricity (Amendment) Bill, 2025, which seeks to implement sweeping reforms across the power sector. This proposed legislation aims to enhance financial stability, promote competition, and speed up the transition to non-fossil fuel electricity generation, all while aligning with the ambitious vision of Viksit Bharat @ 2047. The reforms outlined in the draft are expected to reshape India’s energy landscape significantly.
Financial Viability at Forefront
One of the primary focuses of the draft Bill is the financial viability of electricity distribution licensees. Ensuring reliable and affordable electricity hinges on this sustainability. The proposed amendments will institute cost-reflective tariffs, granting commissions the authority to set tariffs autonomously effective April 1 each year.
Boosting Economic Competitiveness
The current challenges of high industrial tariffs, cross-subsidies, and escalating procurement costs have hampered India’s industrial competitiveness. The new reforms aim to rationalize tariffs, lower costs, and enhance demand to bolster economic productivity and position India more competitively on the global stage.
Accelerating Energy Transition
To meet the target of 500 GW of non-fossil fuel capacity by 2030, the amendments propose to empower the Central Electricity Regulatory Commission (CERC) to introduce market-driven instruments that will attract investment and expedite the growth of renewable energy capacity. The Bill also seeks to enforce non-fossil energy obligations, ensuring alignment with the Energy Conservation Act.
Improving Quality of Service
In a move to enhance both the ease of living and doing business, the draft Bill introduces uniform national standards of service to improve the quality and reliability of electricity supply. Additionally, consumer-friendly reforms include capping assessments for unauthorized use to one year and reducing requirements for appeal pre-deposits.
Strengthening Regulatory Mechanisms
The proposal aims to strengthen regulatory accountability by allowing governments to refer complaints against members of the CERC and State Electricity Regulatory Commissions (SERCs). With a new proposed timeline of 120 days for adjudication and an increase in the strength of the Appellate Tribunal for Electricity (APTEL), the Bill ensures faster resolutions.
Additional Reforms
Further changes include transitioning powers for installing and maintaining electric lines from the repealed Telegraph Act, 1885 to the revised Electricity Act, 2003, establishing a compensation framework at the state level. Moreover, to minimize network duplication and costs, distribution licensees may be permitted to supply electricity through shared networks, pending regulatory approval.
Once enacted, the provisions of the Electricity (Amendment) Bill, 2025 will be uniformly applicable across all states, including Maharashtra. The state government can transparently fund subsidies for specific consumer categories, including tribal households, under Section 65, while ensuring the financial health of the power sector remains intact.
The government has opened the floor for stakeholder comments on the draft Bill since October 9, 2025, and is currently engaged in extensive consultations with various stakeholders. This information was shared by Shri Shripad Naik, Minister of State in the Ministry of Power, during a written reply in the Lok Sabha.
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