MoP releases Draft Electricity (Amendment) Bill 2025

The Ministry of Power (MoP) has circulated the Draft Electricity (Amendment) Bill, 2025, proposing major changes to the Electricity Act, 2003. The key objective is to enforce cost-reflective tariffs, aiming to strengthen the financial health of the power sector, particularly distribution utilities.

The proposed amendments aim to address financial losses in the distribution sector, estimated at over Rs 6.9 lakh crore. A central reform requires Regulatory Commissions to determine cost-reflective tariffs. Supported by the 2025 Supreme Court judgment in BSES Rajdhani Power Ltd. & Anr. vs. Union of India & Ors., the Bill allows Commissions to set tariffs suo motu if utilities fail to file petitions, ensuring new rates take effect at the start of the financial year.

The Bill also targets industrial competitiveness. It proposes a five-year phase-out of cross-subsidies for Manufacturing Enterprises, Railways, and Metro Railways. State Commissions, with State Governments, may exempt distribution licensees from Universal Service Obligations (USO) for consumers exceeding 1 MW demand. A ‘supplier of last resort’ will secure supply if other arrangements fail.

To support the energy transition, CERC is empowered to promote new market platforms and products for non-fossil capacity investment. Non-compliance with non-fossil consumption obligations will incur penalties of 35–45 paisa/kWh.

Consumer protections are strengthened. Unauthorised electricity assessments are capped at 12 months. Mandatory deposits for appeals against assessments are reduced from half to one-third of the assessed amount, with a waiver possible in cases of undue hardship. The Central Government can also set uniform performance standards for distribution licensees.

Regulatory governance reforms include expanded grounds for removal of Commission members, a 120-day deadline for proceedings, and an increase in APTEL members from three to seven to reduce case backlogs.

Other key provisions include incorporating “Right of Way” for electric lines into law, establishing a high-level Electricity Council chaired by the Union Power Minister, mandating cybersecurity regulations, and allowing shared distribution networks to avoid infrastructure duplication.

The Draft Electricity (Amendment) Bill, 2025, is now open for stakeholder feedback before it moves through the legislative process.

Access the full document here.