Electricity Amendment Bill 2025 may be headed for Budget Session. What’s at stake?

The government is preparing to table the controversial Electricity Amendment Bill 2025 in the upcoming Budget session of Parliament. As part of the run-up to its introduction, the Ministry of Power will now begin structured consultations with key stakeholders, including the power industry, trade unions, state utilities and consumer groups, in an effort to build consensus around one of the most far-reaching power sector reforms in two decades.  

What is the Electricity Amendment Bill 2025?  

The Electricity (Amendment) Bill, 2025 seeks to overhaul India’s electricity distribution and regulatory framework to make power supply more competitive, financially sustainable and consumer-focused. The Bill moves away from the traditional monopoly-based distribution model and opens the door for regulated competition, allowing multiple distribution licensees to operate in the same area using shared network infrastructure.

A central promise of the Bill is that subsidised tariffs for farmers and low-income households will be fully protected through transparent, budgeted subsidies, even as the broader tariff structure becomes more cost-reflective. The government argues that this approach balances social protection with financial discipline.  

Why is the government pushing this reform?  

The proposed amendment is driven by long-standing structural weaknesses in India’s power sector, particularly at the distribution level. Many state-run distribution companies continue to post heavy losses due to poor billing efficiency, high aggregate technical and commercial (AT&C) losses, and tariff distortions.

Another key concern is cross-subsidisation, where industrial and commercial consumers pay higher tariffs to subsidise other categories. The government says this has made Indian manufacturing and logistics less competitive compared to global peers. The Bill proposes a phased elimination of cross-subsidy for manufacturing, railways and metro systems within five years.

How will competition and tariffs change?

Under the Bill, State Electricity Regulatory Commissions (SERCs) will play a stronger role in enforcing cost-reflective tariffs, regulating wheeling charges and ensuring financial viability of all distribution licensees. These wheeling charges would apply uniformly to all users of the distribution network, whether public or private, helping fund maintenance, salaries and future network expansion.

The reform framework mirrors the existing Inter-State Transmission System (ISTS) model, where public and private players compete to build assets while sharing infrastructure under regulatory oversight. The government says this model has already reduced costs and improved reliability in transmission and can now be replicated in distribution.

What does it mean for states & consumers?

The Bill proposes the creation of an Electricity Council to improve Centre-State coordination on policy and implementation. While competition is encouraged, states retain a significant role in shaping how reforms are applied locally, including decisions on universal service obligations and open access thresholds.

For consumers, the government argues the changes will lead to better supply quality, fewer outages and more accountable utilities. All distribution licensees will be subject to universal service obligations, ensuring non-discriminatory access to electricity, even as large consumers gain greater freedom to procure power directly.

Trade unions and some state governments have raised concerns that increased private participation could weaken job security, dilute public control over a strategic sector, and shift risks onto consumers. There are also fears that cost-reflective tariffs, despite subsidy assurances, could lead to higher bills if states delay or underfund subsidy payments.