The Ministry of Power has released the Draft Electricity (Amendment) Bill, 2025, marking a major step toward structural reforms intended to strengthen the power sector in alignment with evolving industry needs and the goal of “Viksit Bharat @ 2047.” The Ministry has formally requested comments and suggestions on the draft Bill from a wide range of stakeholders, including government bodies, regulators, PSUs, and industry associations. This notice was published on October 9, 2025.
Key Focus of the Proposed Amendments
The amendments aim to address chronic challenges in the power sector—specifically financial distress in the distribution segment and high industrial tariffs—while accelerating the transition to clean energy.
Major areas of reform include:
- Mandating cost-reflective tariffs to eliminate financial losses in the distribution sector (which currently exceed ₹6.9 lakh crore).
- Rationalizing industrial tariffs by eliminating cross-subsidies to boost manufacturing competitiveness.
- Facilitating non-fossil fuel capacity addition through new market mechanisms.
- Enhancing accountability of regulatory commissions and speeding up dispute resolution.
Major Proposed Reforms
The Bill proposes comprehensive changes across the Electricity Act, 2003:
1. Market and Tariff Reforms
Amends Section 61 to make it mandatory for Regulatory Commissions to determine cost-reflective tariffs. If an application for tariff determination is not filed on time, the Appropriate Commission shall determine the tariff suo moto (on its own initiative) to ensure new tariffs are implemented by the start of the next financial year.
Mandates that cross-subsidy for Manufacturing Enterprises, Railways, and Metro Railways be fully eliminated within five years from the date the Amendment Act commences.
Empowers the Appropriate Commission to promote a power market and may introduce and regulate market platforms, intermediaries, and market products (Section 66).
2. Regulatory and Governance Changes
Enforcement of Non-Fossil Obligation (RPO)
Introduces a monetary penalty for non-compliance with non-fossil sources of energy consumption (RPO). The penalty will be a sum calculated at a rate of not less than thirty-five paisa per kilowatt-hour and not more than forty-five paisa per kilowatt-hour for default (Section 142).
- Regulatory Accountability: Expands the grounds for removing a Member of a Regulatory Commission to include willful violation or gross negligence in performing duties (Section 90).
- Adjudication Timeline: Proposes a timeline of 120 days for the disposal of adjudicatory proceedings by the Appropriate Commission (Section 92).
- APTEL Strength: Proposes to increase the number of members in the Appellate Tribunal for Electricity (APTEL) from three to not more than seven to reduce the massive case backlog.
- Electricity Council: Proposes the establishment of an Electricity Council, chaired by the Union Minister of Power with State Electricity Ministers as members, to advise on policy measures and facilitate consensus on reforms (Section 166).
3. Distribution, Infrastructure, and Security
State Commissions may exempt distribution licensees from the obligation to supply electricity to consumers requiring a maximum power exceeding one megawatt. The Commission must, however, designate a distribution licensee as the supplier of last resort if a consumer’s alternate arrangement fails.
The Act explicitly allows distribution licensees to supply electricity through their own or shared distribution system in the same area.
The Central Electricity Authority (CEA) will specify cybersecurity requirements for the integrated power system (Section 73).
The Bill proposes to incorporate provisions for placing and maintaining electric lines directly into the Electricity Act (Section 164), transitioning these powers from the repealed Indian Telegraph Act, 1885. This includes mechanisms for compensation disputes to be determined by the District Judge.
The Bill also limits the maximum assessment period for unauthorized electricity use to twelve months (Section 126). The mandatory deposit required for appeals against such assessments is proposed to be reduced from half to one-third or as prescribed by the Appropriate Government.
Call for Comments
The Ministry has requested comments and suggestions on the Draft Electricity (Amendment) Bill, 2025, to be furnished within 30 days of the issuance of the letter. Submissions should be sent via email to rr1-mop@gov.in.