More power to Power: Deconstructing the Draft Electricity (Amendment) Bill 2025

On 9 October 2025, the Draft Electricity (Amendment) Bill, 2025, was released by the Ministry of Power seeking comments from stakeholders (i.e. States).

The goal of the Draft Electricity (Amendment) Bill 2025 is to improve regulatory accountability, encourage sustainable energy, and increase financial viability to revolutionise India’s power industry.

India’s ambitious vision for a developed economy by 2047 — Viksit Bharat —requires a robust, sustainable, and competitive power sector. The Draft Electricity (Amendment) Bill 2025, released by the Ministry of Power, proposes sweeping reforms to the Electricity Act 2003, to address long-standing challenges and accelerate the energy transition.

In this article, we will discuss what the Draft Electricity (Amendment) Bill 2025 says, the benefits for consumers and end with a conclusion.

‘Powering Viksit Bharat’

To achieve Viksit Bharat by 2047, India needs a power sector that can maintain globally competitive industries while also being financially stable and environmentally sustainable.

By guaranteeing that everyone has access to inexpensive, dependable, and clean electricity and facilitating a smooth and just energy transition, the proposed revisions to the Electricity Act 2003 aim to reinforce this basis.

According to the Draft Electricity Bill 2025, “Despite major structural reforms under the Act, such as unbundling of utilities, competition, and open access, the distribution segment continues to face severe financial stress, with cumulative losses exceeding ₹6.9 lakh crore.”

While cross-subsidy-induced high industrial tariffs have affected industrial competitiveness and limited economic growth, regulatory delays have further undermined the sector’s financial viability.

A strong and progressive legal framework is necessary to address these issues and fulfil India’s clean energy commitments. Therefore, the proposed changes are intended to ensure the financial sustainability of the power sector and to improve living and business conditions.

Additionally, they seek to boost regulatory accountability, raise the proportion of non-fossil electricity generation, and improve industrial competitiveness.

Major points of the Electricity (Amendment) Bill 2025

Following are the key points of the main amendments:

1. Financial viability and tariff reform

The Bill mandates that tariffs must reflect the actual cost of electricity supply. This aligns with the Supreme Court’s 2025 judgment in BSES Rajdhani Power Ltd. & Anr. vs. Union of India & Ors., which stated:

“Electricity tariffs must be cost-reflective to ensure the financial viability of the power sector.”

State Electricity Regulatory Commissions (SERCs) will have the authority to decide tariffs suo motu if utilities do not timely submit petitions, thereby avoiding delays in tariff revisions.

This would improve the overall financial discipline in the power sector by guaranteeing that updated tariffs are applied starting on April 1 of each fiscal year.

2. Boosting industrial competitiveness

Affordable and dependable power is essential for businesses, transportation, and industries in a developing and competitive economy.

In order to increase India’s economic productivity and competitiveness internationally, the proposed revisions seek to simplify electricity rates, unlock demand, and lower logistics costs.

The suggested changes seek to increase India’s economic productivity and global competitiveness by rationalising electricity rates, unlocking demand, and lowering logistics costs.

High industrial tariffs have long hindered MSME growth. The Bill proposes to:

• Allow open access for consumers above 1 MW, relieving DISCOMs from universal service obligations
• Exempt manufacturing enterprises, railways, and metro systems from cross-subsidies
• Promote captive generation with clear eligibility criteria set by governments

3. Accelerating the energy transition

To meet India’s target of 500 GW non-fossil capacity by 2030 and around 2,000 GW by 2047, the Bill empowers the Central Electricity Regulatory Commission (CERC) to introduce market platforms and products like contracts for difference.

Currently, the Energy Conservation Act of 2001 permits the Central Government to impose legally binding non-fossil energy consumption requirements; however, the Electricity Act of 2003 lacks comparable provisions.

It is suggested that such clauses be added to the Electricity Act as well to maintain consistency between the two laws and to further India’s objective of having clean, affordable and dependable energy.

The draft Electricity (Amendment) Bill 2025 also introduces penalties for failing to meet renewable purchase obligations. The Bill states that: “Entities not consuming power from non-fossil sources may be penalised at 35–45 paise per kWh.”

4. Regulatory strengthening and cybersecurity

The Bill expands grounds for removal of regulatory commission members to include wilful violations and gross negligence. It also sets a 120-day timeline for adjudication of cases and increases the number of Appellate Tribunal members from three to seven.

All customers must receive a consistent minimum standard of service in order to guarantee a dependable power supply. Without it, supplier quality in a number of areas continues to fall short of peer and international norms.

By setting such standards, distribution licensees will be held more accountable, service quality will increase, and economic growth will be supported. Therefore, it is suggested that rules be introduced that would allow for the prescription of universal benchmark service standards across the country.

The evaluation time for unauthorised power use is currently uncapped by law, which allows for discretionary assessments and the potential for harsher penalties.

To reduce discretion and avoid disproportionate fines, it is suggested that the assessment period be capped at one year.

Moreover, a recommendation is made to decrease appeal deposits to either a third of the assessment or as determined by the government.

Furthermore, in situations of extreme hardship, the appellate authority has the discretion to waive or lower the deposit obligation.

Recognising rising cyber threats, the Central Electricity Authority (CEA) will now specify cybersecurity requirements for integrated power systems.

5. Ease of living and doing business

The Bill introduces:

• Minimum service standards for electricity supply
• Simplified appeal mechanisms for unauthorised use assessments
• Removal of outdated licensing requirements for defence areas

6. Institutional reform: The Electricity Council

A new Electricity Council will be established, chaired by the Union Power Minister, to advise on policy, coordinate reforms, and foster consensus between the Centre and States.

Key benefits for consumers

1. Transparent and fair tariffs

• Mandatory cost-reflective tariffs: By ensuring that power prices accurately represent supplier costs, the Bill lowers hidden cross-subsidies and increases pricing transparency.
• Reduced burden of cross-subsidies: Transportation and industrial sectors (such as metros and railroads) will not be allowed to subsidise other consumers, which could eventually result in reduced overall rates for residential users.

2. Improved service standards

• Minimum service obligations: To guarantee a more dependable and steady supply of energy, distribution firms (DISCOMs) are required to adhere to specified service standards.
• Faster grievance redress: Customers contesting assessments of unlawful electricity use can more easily contest unfair charges because of the Bill’s streamlined appeals process.

3. Greater consumer choice

• Open access for large consumers: With the ability to select their own electricity supplier, consumers with demand above 1 MW can promote competition and possibly reduce costs.
• Captive generation support: It is easier for consumers to install their own power-producing units, which is particularly advantageous for commercial and industrial customers.

4. Cleaner and greener energy

• Promotion of non-fossil energy: The Bill mandates minimum consumption from clean energy sources, encouraging DISCOMs to offer greener power options to consumers.
• Market-based renewable incentives: New mechanisms like contracts for difference will help bring down renewable energy costs, benefiting consumers in the long run.

5. Enhanced regulatory oversight

• Stronger accountability for regulators: The Bill introduces stricter grounds for the removal of commission members and sets timelines for adjudication, ensuring consumer complaints are addressed promptly.
• Cybersecurity standards: With rising digital threats, the Bill empowers the Central Electricity Authority to enforce cybersecurity norms for power systems, protecting consumer data and infrastructure.

Conclusion

The Draft Electricity (Amendment) Bill 2025 is already gaining hurdles from States like Kerala — stating that this may lead to ‘cherry-picking’ of high-end consumers by private distributors, leaving public-sector companies into losses.

However, this is a major move for a cleaner, more competitive and consumer-focused power sector. It creates a strong base for a stable and inclusive energy future by harmonizing legal structures with India’s energy objectives.