Electricity (Amendment) Bill 2025 Paves the Way for Competitive, Transparent, and Renewable-Driven Power Market in India – EQ
In Short : The Electricity (Amendment) Bill 2025 proposes major reforms to India’s power sector, allowing multiple distributors in one area to boost competition. It mandates cost-reflective tariffs, phases out cross-subsidies, and requires direct subsidies from states. The Bill empowers regulators, supports renewable energy obligations, and aims to make India’s electricity market more efficient, transparent, and investor-friendly.
In Detail : The Electricity (Amendment) Bill 2025 marks a significant step toward transforming India’s power sector. It introduces measures to promote competition, ensure financial sustainability, and enhance efficiency across the electricity value chain. The Bill seeks to redefine how power is distributed, priced, and regulated in the country.
A key feature of the Bill is the introduction of multiple distribution licensees operating in the same geographical area. This move is aimed at breaking the monopoly of state-run discoms and allowing consumers to choose their power supplier. The government believes competition will drive better service quality and cost efficiency.
To improve financial discipline, the Bill mandates cost-reflective tariffs. Power tariffs will now align more closely with the actual cost of supply, reducing the burden of hidden subsidies. This reform is expected to create a more transparent pricing system and encourage investment in the sector.
The Bill also proposes the gradual phasing out of cross-subsidies for industrial consumers such as railways and manufacturing units. Instead, it allows states to offer direct subsidies to targeted groups like farmers and low-income households, ensuring social welfare without distorting electricity prices.
Regulatory reforms are another cornerstone of the proposed law. State Electricity Regulatory Commissions will have the authority to revise tariffs suo motu, minimizing delays caused by bureaucratic or political interventions. This aims to make tariff adjustments more responsive and data-driven.
A new National Electricity Council, chaired by the Union Power Minister, will be established to promote policy coordination between the Centre and states. This body will help resolve disputes, harmonize regulations, and ensure smooth implementation of reforms across jurisdictions.
The Bill also reinforces India’s commitment to renewable energy by strengthening Renewable Purchase Obligations (RPOs). Non-compliance may attract stricter penalties, encouraging greater integration of solar, wind, and storage solutions into the national grid.
Additionally, the legislation recognizes the importance of energy storage systems and grid sharing. These provisions are designed to enhance grid reliability, balance supply-demand variations, and support the growing share of intermittent renewable power.
Overall, the Electricity (Amendment) Bill 2025 aims to build a modern, competitive, and sustainable power sector. By combining policy reforms with technological advancement, the government envisions an electricity market that benefits consumers, empowers states, and accelerates India’s transition toward a cleaner energy future.
