Electricity (Amendment) Bill, 2025

Why in News?

The Union government is revising the Electricity (Amendment) Bill, 2025, after stakeholder pushback from regulators, consumer groups and state governments.

• Aim – To reform power distribution and improve the efficiency and financial discipline of distribution companies (discoms).

• Amendment made to– The Electricity Act, 2003.
• Nodal Ministry – Ministry of Power.

• Key Provisions – Regulatory Reforms – Greater autonomy to State Electricity Regulatory Commissions (SERCs) in tariff-setting.
• Reduced role of discoms in tariff determination.
• Stricter timelines and contractual discipline.
• Competition – Allows more than one company to operate in the same area using a common distribution network.
• Intended to improve service quality and reduce losses.
• Subsidy Rationalisation – Phased reduction of cross-subsidies.
• Subsidies to be delivered through Direct Benefit Transfer (DBT) instead of tariff-based support.
• Discom Financial Discipline – Tighter payment security mechanisms.
• Timely clearance of dues.
• Greater accountability in power procurement.
• Renewable Energy provisions – Alignment with Renewable Purchase Obligations (RPO).
• Penalty for non-compliance ranging from 35–45 paise per unit.
• Grid discipline linked with expanding clean energy targets.
• Institutional Mechanism – Proposes the establishment of an Electricity Council comprising Union and State power ministers to advise and coordinate reforms.

References

1. Down to Earth | Electricity (Amendment) Bill, 2025
2. PRS | Electricity (Amendment) Bill, 2025