India To Table Electricity Amendment Bill in Budget Session to Strengthen Power Sector Framework

India is preparing to introduce the Electricity Amendment Bill during the upcoming budget session of Parliament as part of efforts to improve the overall efficiency and financial health of the power sector. Power Minister Manohar Lal Khattar reiterated that there has been no change in the government’s stance on market coupling, signalling continuity in ongoing policy direction.

The Bill follows extensive consultations, including a meeting with the Parliamentary Consultative Committee to gather views from Members of Parliament. While acknowledging progress made since the original Electricity Act of 2003, the Minister stated that persistent financial stress in the distribution segment continues to be a critical challenge requiring legislative intervention.

Key Provisions to Address Distribution‑Sector Stress

The Bill includes provisions aimed at ensuring cost‑reflective tariffs, which remain central to stabilising distribution company (discom) finances. It proposes empowering Electricity Regulatory Commissions to act suo motu in cases where utilities delay tariff filings, strengthening regulatory oversight.

The Minister clarified that state governments will retain the ability to provide subsidies to domestic and agricultural consumers without increasing costs for these groups. These measures are designed to balance consumer welfare with financial discipline as policymakers work to streamline distribution‑sector operations.

Reducing Cross‑Subsidy Distortions and Supporting Industrial Competitiveness

A major focus of the amendment is reducing the distortions caused by cross‑subsidies and surcharges, which have long affected industrial electricity pricing. The Bill seeks to empower State Electricity Regulatory Commissions, in consultation with state governments, to exempt discoms from the obligation to supply large consumers.

This would allow eligible industrial users to procure electricity directly from alternative sources at competitive rates. By enabling large consumers to exit discom supply after giving reasonable notice, the government aims to lower fixed‑cost burdens on discoms while enhancing economic competitiveness for industries.

Promoting Non‑Fossil Energy and Market‑Driven Renewable Procurement

The Minister emphasised that increasing the use of non‑fossil electricity is a collective responsibility and that the Bill proposes a minimum consumption obligation for such power. To ensure adequate availability of cost‑competitive renewable energy, the Bill enables capacity additions through both market mechanisms and traditional procurement by discoms.

These changes are expected to reduce the financial burden on discoms while supporting national energy‑transition goals. Policymakers aim to expand renewable capacity in a way that complements supply obligations without exacerbating discom liabilities.

Improving Service Delivery and Reducing Compliance Burdens

The Bill includes several provisions aimed at improving service delivery for consumers and reducing compliance burdens for utilities. It seeks to create a more conducive environment for business by simplifying procedures and enhancing operational transparency.

Proposed reforms include measures to ensure timely service, strengthen accountability, and streamline interactions between utilities and consumers. These improvements are aligned with the broader agenda of modernising India’s electricity governance framework.

Read More: Power Discoms Net ₹2,701 Crore Profit in FY25, Says Ministry.

Conclusion

India’s proposed Electricity Amendment Bill aims to reinforce the legislative backbone of the power sector by addressing longstanding issues in distribution, pricing, and regulatory governance. The Bill balances financial reform with consumer protection by maintaining subsidy flexibility while promoting cost‑reflective pricing.

It advances industrial competitiveness by supporting open access for large consumers and aligns with national clean‑energy goals through provisions on non‑fossil electricity. The upcoming budget session will determine how these reforms progress toward implementation.

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