New Delhi, Feb 9: The Union Government has proposed amendments to the Electricity Act, 2003 to eliminate wasteful duplication in electricity distribution infrastructure and promote efficient competition in the power sector, the Ministry of Power said on Monday.
According to the draft Electricity (Amendment) Bill, 2025, the government intends to allow multiple distribution licensees operating in the same area to use an existing distribution network instead of building parallel infrastructure such as poles, wires and substations. At present, while the Act permits multiple distribution licensees in the same area and mandates non-discriminatory open access, each new licensee is required to set up its own separate network, leading to higher costs.
Under the proposed amendment, a distribution licensee will be allowed to use another licensee’s distribution network upon payment of charges determined by the respective State Electricity Regulatory Commission (SERC). The move is aimed at reducing infrastructure duplication and lowering the overall cost of electricity supply.
The Ministry clarified that under existing provisions, the area of supply for each distribution licensee is approved by the SERC at the time of granting a licence. Subordinate legislation already prescribes a minimum geographical area for granting a distribution licence, typically covering an entire Municipal Corporation or at least three adjoining revenue districts, unless a smaller area is specifically notified by the appropriate government.
The draft amendment also reiterates that all distribution licensees, whether public or private, will continue to have a Universal Service Obligation. They will be required to supply electricity to all consumers in their area of supply, including rural and domestic consumers, without discrimination, except for large consumers where specific exemptions are granted by the SERC.
In addition, the amendment proposes to mandate SERCs to establish a transparent and fair framework for introducing multiple distribution licensees within the same supply area.
The government said the proposed changes are not expected to adversely impact agricultural and domestic consumers. Instead, increased competition is expected to improve service quality. Subsidies for specified consumer categories, including agricultural and domestic consumers, will continue to be provided by state governments under Section 65 of the Electricity Act.
This information was provided by the Minister of State for Power, Shri Shripad Naik, in a written reply to the Rajya Sabha on Monday.
