The Electricity (Amendment) Bill, 2025 sets out a wide-ranging set of changes to India’s electricity distribution architecture, with the stated objectives of improving reliability, rationalising tariffs and addressing persistent financial stress in the sector. The factsheet issued by the Press Information Bureau describes the Bill as an attempt to align the electricity system with the requirements of a growing economy while retaining protections for subsidised consumer categories.
The Bill has been framed against longstanding deficits in billing efficiency and persistently high aggregate technical and commercial (AT&C) losses. Distribution companies continue to incur significant losses, with most consumers dependent on a single distribution licensee in their respective regions. According to the factsheet, this arrangement has constrained service improvements, limited innovation and sustained cross-subsidies in which industrial consumers bear elevated tariffs to support other categories of users.
A central element of the amendment is the push toward cost-reflective tariffs. The Bill requires tariffs to reflect the cost of supply while ensuring that subsidised categories such as farmers and low-income households continue to receive budgeted subsidies under Section 65. The cross-subsidy burden paid by manufacturing industries, the Railways and metro rail networks is proposed to be phased out within five years, with the intent of reducing hidden subsidies and enhancing transparency in tariff structures.
The Bill also enables regulated competition in distribution. Multiple licensees may operate in the same area using shared network infrastructure, with all licensees subject to a Universal Service Obligation (USO) ensuring non-discriminatory access and supply. State Electricity Regulatory Commissions (SERCs), in consultation with State governments, may exempt licensees from the USO for large consumers eligible for open access with loads above 1 MW.
To support the shared-network model, SERCs are empowered to determine uniform, cost-reflective wheeling charges applicable to all network users. These charges are expected to ensure adequate financial resources for utilities’ operations, maintenance and future capacity development. The factsheet draws parallels with the Inter-State Transmission System (ISTS), where a shared network model under the oversight of the Central Electricity Regulatory Commission allows public and private transmission service providers to build assets and recover costs through monthly user payments redistributed across providers.
The Bill introduces several structural provisions addressing broader power system requirements. It defines the role of Energy Storage Systems (ESS) within the electricity ecosystem and authorises Commissions to regulate wheeling charges to prevent duplication of distribution networks. It strengthens regulatory oversight by enabling SERCs to enforce standards, impose penalties for non-compliance and determine tariffs suo motu when applications are delayed.
To improve centre–state coordination, the Bill establishes an Electricity Council comprising representatives from the central and state governments. This Council will serve as a forum for consultation and consensus-building on electricity policy and its implementation.
The amendment includes measures aimed at strengthening non-fossil energy procurement, formalising renewable purchase obligations for distribution licensees and prescribing penalties for non-compliance. It also enables the development of new market instruments and trading platforms to support the evolution of India’s electricity markets.
On the legal front, the Bill updates statutory definitions and cross-references to align with modern legislation, including the Companies Act, 2013. It introduces the Electric Line Authority, whose powers mirror those of the Telegraph Authority under the Indian Telegraph Act, 1885. This Authority will oversee compensation, dispute resolution and coordination with local authorities on matters relating to electric lines.
Overall, the Bill seeks to address the financial, operational and regulatory challenges in India’s distribution segment. It aims to balance cost recovery with targeted subsidies, enable competition through shared networks and reinforce institutional and regulatory mechanisms. Its effectiveness will depend on implementation by State utilities and regulators, whose actions remain central to India’s electricity distribution ecosystem.
