The Ministry of Power has finalized the Energy Conservation (Compliance Enforcement) Rules, 2025, which establish a new legal framework for verifying, assessing, and penalizing non-compliance with the Energy Conservation Act, 2001. These rules came into force upon their publication on October 22, 2025.
The objective of the new rules is to empower the Bureau of Energy Efficiency (BEE) to efficiently detect, verify, assess, and represent non-compliance cases before the adjudicating officers appointed by the State Commissions.
Applicability and Enforcement Mandate
The rules apply to several key entities mandated under the Act, focusing enforcement on manufacturers, importers, and major energy consumers:
- Persons referred to in Section 13A of the Act.
- Manufacturers or importers of appliances, equipment, and vehicles specified under Clause (c) and (b) of Section 14.
- Designated Consumers specified under Clause (n) and Clause (x) of Section 14 of the Act.
The BEE is now specifically tasked with the responsibility of compliance enforcement with the norms and standards specified by the Central Government. The BEE will verify compliance (either directly or through designated agencies), obtain necessary information from entities, and service notices to those found contravening the rules.
Jurisdiction and Penalty Funds
The new framework centralizes the penalty mechanism and clarifies the jurisdiction of the State Commissions and the allocation of collected funds:
- The adjudicating officer of the State Commission is competent for adjudging failure to comply with Sections 13A and 14 of the Act. The specific jurisdiction is determined by the location of the registered office of the manufacturer/importer or the location of the designated industry/establishment.
- The rules clarify that any penalty for a shortfall in achieving non-fossil consumption targets imposed by the Central Government under the Act shall be calculated based on the Central norms, not cumulatively with any state-level norms under the Electricity Act, 2003.
- All penalties payable by the specified entities must be credited to the Central Energy Conservation Fund.
- From the amount credited to the Central Fund, 90 percent shall be transferred to the concerned State Government (Consolidated Fund of the State) in proportion to its share of sales or location of the industry, and 10 percent shall be transferred to the Central Government.
- Any amount recovered towards compliance that is not covered under Section 26 of the Act shall also be credited to the Central Energy Conservation Fund.