Electricity (Amendment) Bill 2025: Will you have to spend more on electricity bill? Key FAQs here

The central government recently released the draft Electricity (Amendment) Bill 2025 to seek feedback from the public. The draft Bill proposes sweeping reforms to open up the power distribution sector to competition. It also proposes measures to improve efficiency to phase out cross-subsidies and financial sustainability of electricity system by phasing out cross-subsidies and strengthening regulatory accountability.

"It (the Bill) lays the foundation for a future-ready power sector aligned with the vision of Viksit Bharat @ 2047. At the same time, it fully protects subsidised tariffs for farmers and other eligible consumers. State Governments may continue to provide these subsidies under Section 65 of the Act," the government said in a release.

The draft Bill has raised concerns about whether increased competition end subsidised tariffs and lead to higher electricity bills for consumers. However, the government has clarified that the Bill will not alter subsidised tariffs currently being paid by electricity consumers. Here are some key FAQs about the draft electricity amendment Bill answered by the government.

Will the draft Electricity (Amendment) Bill 2025 increase electricity costs for farmers and common consumers?

No, according to FAQs released by the Press Information Bureau. It says, "Competition reduces the overall cost of electricity supply by improving efficiency and accountability in supply. Shared network usage will eliminate duplication of distribution lines and sub-stations. Under monopoly electricity supply model, technical and commercial losses are high and often merged under one head, masking inefficiencies and theft."

"When State Governments provide subsidised electricity to segments like farmers or domestic consumers, the subsidy burden includes not only the intended social support but also the cost of monopoly operations,"

PIB further says, "By enabling shared network usage and facilitating competition, the reforms will reduce losses and lower the effective subsidy burden on State Governments, without altering the subsidised tariffs paid by consumers."

Will cost-reflective tariffs make power unaffordable for farmers and the poor?

PIB says that the cost-reflective tariffs will break the DISCOM debt cycle, enabling reliable service, timely maintenance, and distribution network infrastructure upgrades.

"Cross-subsidy elimination for manufacturing industries, Railways, and Metros will improve competitiveness and help in job creation. Hidden cross-subsidies are replaced with transparent and budgeted subsidies (under section 65 of the Act), protecting vulnerable consumers like farmers and poor."

Will the new law end Government DISCOMs or allow cherry-picking by private companies?

According to PIB, government DISCOMs will continue to operate alongside private licensees in a regulated, level-playing environment. Competition would reduce costs, improve efficiency and service quality.

Will the Bill centralise powers or erode State autonomy?

PIB says that electricity is in the Concurrent List, enabling both Centre and States to legislate. "The Bill envisages implementation of reforms through a consultative process between them."

The Bill proposes creation of Electricity Council, which will serve as a consultative body to build policy consensus. However, SERCs will continue to determine tariffs, issue licences, and regulate intra-State activities.

The Bill allows SERCs, in consultation with State Governments, to remove USO for large consumers (>1 MW) who are currently eligible for open access under the Act.

Under the proposed Bill, SERCs will fix cost-reflective wheeling charges.