Electricity (Amendment) Bill, 2025: Centre Clarifies Key New Provisions

Ziraat Times Team Report

New Delhi: The Government of India has issued a detailed clarification on the Electricity (Amendment) Bill, 2025, describing it as a progressive reform to modernise the power distribution sector, promote competition, and strengthen financial sustainability — while ensuring continued protection of subsidised tariffs for farmers and low-income consumers.

According to the Ministry of Power, the Bill aims to build a future-ready power sector aligned with the vision of Viksit Bharat @2047. It seeks to foster healthy competition between government and private distribution companies (Discoms), encourage efficiency, and offer consumers real choices, all under the supervision of State Electricity Regulatory Commissions (SERCs).

Competition Without Cost Rise

Addressing public concerns, the government clarified that competition will not increase electricity costs for farmers or common consumers.
It said that shared network usage between public and private Discoms will reduce duplication of infrastructure and cut losses. “When State Governments provide subsidised electricity, the burden often includes inefficiencies of monopoly operations. Shared infrastructure and competition will lower this cost without changing the subsidised tariffs paid by consumers,” the statement said.

Cost-Reflective Tariffs and Financial Stability

The FAQs explained that cost-reflective tariffs will help break the cycle of debt affecting state utilities, ensuring reliable services and timely maintenance.
At the same time, budgeted subsidies under Section 65 of the Act will continue to protect vulnerable sections such as farmers and low-income households.
The Bill also removes hidden cross-subsidies on industries and transport sectors, improving competitiveness and enabling job creation.

Fair Use of Distribution Networks

The government emphasised that SERCs will fix cost-reflective wheeling charges to ensure fair payment for shared network usage.
This model draws from the Inter-State Transmission System (ISTS), where both public and private players operate shared transmission infrastructure successfully under Central Electricity Regulatory Commission (CERC) supervision.
The statement said this arrangement ensures equitable sharing of costs and encourages faster, more reliable network development.

No Threat to State Utilities

Dispelling concerns that private participation may displace state Discoms, the government clarified that public utilities will continue to operate alongside private licensees in a regulated and level playing environment.
Every distribution licensee will have Universal Service Obligation (USO) — the duty to serve all consumers within a defined area without discrimination.
SERCs will regulate performance standards and can penalise or revoke licences for non-compliance.

Large consumers, such as industries using over 1 MW, may be exempted from USO under SERC supervision and can directly procure power through open access, ensuring flexibility in power sourcing.

Federal Structure Intact

Addressing concerns over centralisation, the government reiterated that Electricity remains a subject in the Concurrent List, allowing both the Centre and States to legislate.
The proposed Electricity Council will serve as a consultative forum to foster consensus and coordination between the Centre and States.
SERCs will continue to regulate intra-State operations, determine tariffs, and issue licences, ensuring state autonomy and cooperative governance.

A Step Toward a Modern Power Sector

The Electricity (Amendment) Bill, 2025 envisions a power sector that is financially viable, technologically advanced, and consumer-centric, while preserving social protection for vulnerable groups.