By Saurav Anand
The Union government is considering introducing the Electricity (Amendment) Bill, 2025 in the upcoming Budget Session of Parliament, with the aim of opening up the power distribution sector and addressing the persistent financial stress faced by electricity distribution companies (discoms), Power Minister Manohar Lal said on Monday.
Speaking on the sidelines of the inauguration of the IIT-Delhi–CERC–Grid India Centre of Excellence, the Minister said the proposed amendments to the Electricity Act, 2003 are intended to ensure financial discipline and prevent losses in the distribution segment.
“In the next Budget Session, we are bringing amendments to the Electricity Act so that discoms do not face losses and are able to make timely payments,” he said.
Addressing Stakeholder Concerns
The Ministry of Power had released the draft Electricity (Amendment) Bill, 2025 in October last year for public consultation. The proposals triggered opposition from Central Trade Unions and power employees’ federations, which criticised the Bill as an attempt to allow private participation in distribution and raised concerns over its implications for the federal structure.
Following the protests, the Ministry issued a set of frequently asked questions clarifying that the amendments are intended as progressive reforms to strengthen the distribution sector through financial discipline, competition and efficiency.
The Ministry said the Bill encourages competition between government-owned and private discoms under the supervision of State Electricity Regulatory Commissions (SERCs), leading to improved service quality and greater consumer choice.
On the question of state autonomy, the Ministry said electricity is a subject under the Concurrent List, enabling both the Centre and states to legislate. It added that the proposed reforms envisage a consultative framework between the two.
According to the Ministry, a proposed Electricity Council will act as a platform for policy coordination, while SERCs will continue to determine tariffs, issue licences and regulate intrastate activities.
Recently, the ministry held a meeting, chaired by Union Power Secretary Pankaj Agarwal, and attended by Central Electricity Authority Chairperson Ghanshyam Prasad and other officials, to discuss suggestions and objections received on the draft Electricity (Amendment) Bill, 2025.
Officials familiar with the discussions said a key proposal that drew attention during a recent meeting on stakeholder feedback was the amendment to Section 14 of the Electricity Act, 2003.
Shared Distribution Infrastructure
The proposed amendment introduces the concept of a “shared” distribution system, allowing multiple distribution licensees to operate in the same area using common distribution infrastructure. The existing law permits parallel licensees only through their own separate networks.
The draft Bill proposes permitting supply “through their own or shared distribution system”, subject to regulatory oversight.
Paired with changes to Section 42(1), which make non-discriminatory open access a statutory obligation, the proposal would allow one licensee to use another’s network on regulated terms. Officials said the intent is to enable competition at the supply level while avoiding duplication of infrastructure.
“The idea is that the wires can be common, while suppliers compete,” said a person aware of the deliberations.
Ahead of the Budget Session, the Ministry of Power is planning to schedule to hold a Chintan Shivir to deliberate on recommendations from states and unresolved issues. Last month, the Minister chaired a meeting of the Parliamentary Consultative Committee for the Ministry of Power to seek the views of Members of Parliament on the draft Bill.
Describing the amendments as necessary for strengthening the legislative framework of the power sector, Manohar Lal said challenges continue to persist in the distribution segment due to financial stress.
While India has made progress across generation, transmission and renewable capacity since the enactment of the Electricity Act in 2003, distribution remains a concern, he said.
Tariff and Subsidy Reforms
The draft Bill proposes mandating cost-reflective tariffs and empowering regulatory commissions to act suo motu when utilities delay tariff filings. It also clarifies that state governments may continue to provide subsidies to priority consumer categories such as domestic and agricultural users.
The amendments seek to reduce distortions arising from cross-subsidies and surcharges, and propose empowering SERCs, in consultation with state governments, to exempt discoms from supplying large consumers, enabling such consumers to procure power from other sources. Officials said this is expected to reduce the fixed cost burden on discoms.
The Bill also proposes a minimum obligation for the use of electricity from non-fossil sources and facilitating renewable capacity addition through market mechanisms, in addition to procurement through power purchase agreements.
To strengthen regulatory governance, the draft Bill includes proposals to expand the Appellate Tribunal for Electricity and incorporate operational provisions, including right-of-way norms, into the Act.
The Minister said apprehensions regarding privatisation, tariff increases or adverse impact on employees were unfounded, and that regulatory safeguards would be put in place.