Recently the Ministry of Power has released the Electricity (Amendment) Bill, 2025, which seeks to modernise India’s electricity distribution framework.
Why is the Amendment Needed ?
- Structural Inefficiencies: Persistent financial losses in discoms due to poor billing efficiency and high Aggregate Technical & Commercial losses.
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- The old monopoly supply model limits consumer choice and innovation.
- Cross-Subsidy Distortions: Heavy cross-subsidisation burdens industries with inflated tariffs, which hampers manufacturing competitiveness.
- Quality & Reliability Concerns: Limited competition results in weak incentives for service improvements, network upgrades and accountability.
Aggregate Technical & Commercial losses
- They represent the total electricity loss that a power distribution company (DISCOM) suffers due to both technical inefficiencies and commercial issues.
- Components:
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- Technical Losses: Losses that occur during transmission and distribution because of outdated equipment, weak networks, overloading, poor maintenance, or long power lines.
- Commercial Losses: Losses due to theft, meter tampering, unmetered supply, billing errors, or non-payment of bills.
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Core Pillars of the Electricity (Amendment) Bill, 2025
Structural Reforms
- Regulated Competition in Distribution: The Bill enables regulated competition in electricity distribution by allowing multiple licensees to operate in the same distribution area using shared infrastructure.
- Competition governed by State Electricity Regulatory Commissions (SERCs) to prevent cherry-picking and ensure non-discriminatory access.
- Universal Service Obligation (USO): It mandates a Universal Service Obligation (USO) for all licensees to ensure fair access and supply.
- SERCs may exempt distribution licensees from USO for large consumers eligible for Open Access (above 1 MW), with State Government consultation.
Tariff and Cross-Subsidy Rationalisation
- Cost-Reflective Tariffs: The Bill promotes rational and transparent tariffs aligned with actual supply costs.
- Protection for Subsidised Groups: Subsidies to be given directly by State budgets, avoiding burden on industrial consumers.
- Removal of Cross-Subsidy for Industry: The bill seeks to eliminate cross-subsidy for manufacturing industry, Railways and Metros within 5 years.
Infrastructure and Network Efficiency
- Regulated Wheeling Charges: The Bill authorises appropriate Commissions to determine uniform wheeling charges ensuring fair cost-sharing for network use.
- Preventing Duplication: Promotes efficient use of existing networks; avoids parallel network creation.
- Energy Storage Systems (ESS): Introduces provisions for ESS and defines their role in the electricity ecosystem.
Governance and Regulatory Strengthening
- Electricity Council: The Bill establishes an Electricity Council for Centre–State policy coordination and consensus-building.
- The Bill empowers SERCs to enforce performance standards, impose penalties, and initiate suo moto tariff determination when applications are delayed.
Sustainability and Market Development
- The Bill enhances obligations for non-fossil energy procurement and prescribes penalties for non-compliance.
- Power Market Reforms: It supports development of power markets through new instruments and trading platforms.
Electricity Sector in India
- The electricity sector in India is one of the largest and fastest-growing in the world, covering generation, transmission, distribution, and trading.
- India is the 3rd largest producer and consumer of electricity.
- As per IRENA RE Statistics 2025, India ranks 4th globally in Renewable Energy Installed Capacity, 4th in Wind Power, and 3rd in Solar Power capacity.
- It operates under a central–state shared jurisdiction, guided primarily by the Electricity Act, 2003.
- Electricity is in the Concurrent List of 7th Schedule , enabling both Centre and States to legislate
- India’s Energy Landscape
- India’s total installed power capacity reached 476 GW as of June 2025.
- Non-fossil fuel sources now contribute 235.7 GW (49%) of total capacity, including 226.9 GW renewable and 8.8 GW nuclear.
- Thermal power remains dominant, accounting for 240 GW or 50.52% of installed capacity.
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Other Key Reforms
- Ujwal DISCOM Assurance Yojana (UDAY): It is a scheme launched by the Ministry of Power (Government of India) in November 2015, aimed at the operational & financial turnaround of state-owned electricity distribution companies (DISCOMs).
- Revamped Distribution Sector Scheme (RDSS):
- The Revamped Distribution Sector Scheme (RDSS) was launched in June 2021 by the Ministry of Power, Government of India.
- The scheme aims to reduce Aggregate Technical and Commercial (AT&C) losses to 12–15% by 2024–25.
- It seeks to eliminate the gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR).
- It focuses on ensuring 24×7 reliable and quality power supply to all consumers.
- Inter-State Transmission System (ISTS): It is developed on a shared-infrastructure model, where both public and private Transmission Service Providers (TSPs), including Power Grid Corporation of India (a CPSU), participate in the development of ISTS assets under the regulatory oversight of the Central Electricity Regulatory Commission (CERC).
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25 Nov 2025
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