Electricity Law: Decoding the 2025 Amendment Bill for UPSC

Context

The Electricity (Amendment) Bill, 2025 was introduced to resolve deep-rooted inefficiencies and financial strain in India's power distribution sector. It aims to create a future-ready electricity system that aligns with India’s vision of Viksit Bharat 2047 by ensuring reliable, affordable, and high-quality power for all consumers.

What is the Electricity (Amendment) Bill, 2025?

The Bill is a major legislative update designed to modernize the electricity sector by moving away from old monopoly supply models toward a performance-driven approach. It encourages competition between public and private utilities while optimizing network costs through shared infrastructure.

Key Objectives:

• Rationalising Electricity Cost: Making Indian industry and logistics more competitive by reducing hidden cross-subsidies.
• Financial Viability: Promoting cost-reflective tariffs to ensure the financial health of the sector.
• Consumer Protection: Fully protecting subsidized tariffs for farmers and low-income households under Section 65.
• Shared Infrastructure: Enabling shared network use to avoid wasteful duplication and lower system costs.

Core Pillars of the Reform

1. Structural Reforms and Competition

The Bill facilitates regulated competition in electricity distribution by allowing multiple licensees to operate in the same area using shared infrastructure.

• Universal Service Obligation (USO): All licensees are mandated to provide non-discriminatory access and supply to all consumers.
• Performance-Driven Delivery: Utilities must compete fairly to improve service quality and operational efficiency.

2. Tariff and Cross-Subsidy Rationalization

One of the most significant changes is the targeted elimination of cross-subsidies that currently inflate costs for productive sectors.

• Phased Elimination: Cross-subsidies for the Manufacturing Industry, Railways, and Metro railways are to be eliminated within five years.
• Direct Procurement: Industrial users are enabled to procure power directly, enhancing manufacturing competitiveness.

3. Regulatory and Governance Strengthening

The Bill strengthens the accountability of regulatory bodies and coordination between different levels of government.

• Electricity Council: A new body established for Centre-State policy coordination and consensus-building.
• Empowered SERCs: State Electricity Regulatory Commissions (SERCs) can now determine tariffs suo moto if applications are delayed and can penalize non-compliance.
• Electric Line Authority: It grants powers similar to the Telegraph Authority under the Indian Telegraph Act, 1885 for speedier infrastructure development and dispute resolution.

4. Sustainability and Innovation

• Energy Storage Systems (ESS): The Bill introduces definitions and roles for ESS in the power ecosystem.
• Non-Fossil Energy: Obligations for non-fossil energy procurement are strengthened, with penalties for non-compliance.

Significance

The Bill is a blueprint for a modern, efficient, and resilient power sector. By dismantling barriers to manufacturing competitiveness and encouraging private sector participation, it seeks to lower the energy cost for Indian industries while maintaining a social safety net for vulnerable sections like farmers.