The government has introduced the Draft Electricity Amendment Bill 2025, proposing sweeping changes to the Electricity Act, 2003. The amendments target how electricity is generated, distributed, priced and regulated. The intention is to build a modern power sector aligned with renewable goals, better competition, quicker decisions and improved financial health of utilities.

What the Draft Bill Proposes

Key features of the draft include:

• Cost-reflective tariffs:
The law would require power distribution companies and regulators to ensure that tariffs reflect the actual cost of supply. This pushes state regulators toward more transparent, cost-based pricing.

• Multiple suppliers in a single area:
The draft proposes allowing multiple electricity suppliers within the same region and open access to existing distribution networks. This could end the traditional “single supplier monopoly” model.

• Special rules for large consumers:
Industrial, railway and metro consumers above a certain demand threshold may see faster removal of cross-subsidies, which currently raise their tariffs to subsidise smaller users.

• Clear definition of energy storage systems:
For the first time, the law defines “energy storage systems,” formally recognising batteries and similar technologies as part of the power ecosystem.

• Faster approvals and stronger regulation:
The bill aims to speed up regulatory and adjudicatory processes by introducing timelines for decisions, creating an “Electric Line Authority” for transmission/distribution approvals, and strengthening the powers of regulators.

• Stronger push for renewable energy:
It emphasises greater adoption of renewable energy, mandates minimum renewable purchase obligations and imposes penalties for non-compliance.

Why This Change Is Required

India’s power sector faces multiple challenges: financially stressed distribution companies, tariffs that do not always reflect actual costs, slow renewable integration, ageing grids and delays in infrastructure expansion. The existing law—framed in 2003—was designed for a different era. With the rapid rise of renewables, storage technologies, competition, and electricity demand, reform is essential to achieve reliability, affordability and sustainability.

What It Means for Common Indians

• Your electricity bill:
If tariffs become more cost-reflective, smaller consumers may see changes in their bills depending on how each state restructures subsidies.

• Choice of supplier:
Multiple suppliers in your area could one day allow you to choose your electricity provider, leading to better service and competitive pricing.

• Improved reliability:
Stronger regulatory timelines, faster decision-making and infrastructure upgrades could reduce outages and improve service quality.

• Cleaner energy:
Greater integration of renewables and storage systems means your electricity could increasingly come from cleaner sources.

• Industry and jobs:
If large consumers benefit from fairer pricing and competition increases, industries may grow, generate more jobs and boost economic activity—indirectly benefiting everyday citizens.

• Transparency and consumer protection:
Clearer regulatory processes and faster approvals may strengthen consumer rights and improve complaint resolution.

The Big Picture

The draft bill marks a shift from an outdated power framework to a future-ready model. It prepares India’s electricity sector for a world driven by renewable energy, energy storage, flexible grids and climate commitments. For citizens, it means subtle but meaningful improvements in how power is supplied and priced.

Why Everyone Should Care

Electricity affects every household, workplace and service. Whether you’re a student, a business owner or someone managing a home, changes in pricing, supply and regulation matter. These reforms can influence your costs, service quality and future opportunities. Staying aware helps you understand your rights and India’s evolving energy direction.