Explainer: Why power Bill is facing opposition

PUNJAB is witnessing protests by both farmer organisations and power sector employees against the Centre’s push to the Electricity Amendment Bill, 2025. Power sector staff in other states are also opposing the provisions.

Under the Constitution, electricity is on the concurrent list. Under the Electricity Act 2003, the Centre sets the policy and standards, while states manage distribution and the State Electricity Regulatory Commissions function as independent regulators. A spirit of federalism, power sector watchers say, is ensured. The 2025 draft legislation, however, is facing criticism for drifting towards centralisation.

Centre’s argument

According to the Union government, the draft legislation is a progressive reform aimed at strengthening the power distribution sector through financial discipline, healthy competition and enhanced efficiency.

It says the Bill aims to modernise distribution by promoting competition, ensuring cost-reflective tariffs, and enabling direct procurement for industrial users. The Centre maintains that the amendment will ensure “efficiency, uniformity and ease of doing business”.

Why there is resistance

Farmer leaders and power sector employees allege that the Centre is pushing the Bill without consulting states, claiming it would lead to large-scale privatisation of electricity distribution, higher consumer bills, and weakened state control over power regulation. They are also critical of the Punjab government for “remaining silent”, calling it an indirect endorsement of the Centre’s policy despite its impact on farmers and domestic consumers.

Demand for withdrawal

Farmers and farm labourers under the banner of the Kisan Mazdoor Morcha blocked railway tracks at a few locations on December 5, and state power sector employees have held protests in various districts. There have also been scattered instances of farmers removing smart meters.

The protesters are seeking withdrawal of the Electricity Amendment Bill, 2025, while accusing the Centre of indifference to their concerns. They fear it will lead to privatisation of the power sector, ending crucial subsidies, removing universal supply obligations for private firms, and drastically increasing electricity costs for rural households and farmers. The end result, they contend, will be that power will become unaffordable and the public sector’s role in providing essential services will be undermined.

They see it as a move that favours private corporations over public welfare, strengthening their hold over energy. Power sector engineers and workers also fear job losses.

Contentious provisions

A provision in the amended draft legislation that has raised hackles is allowing multiple distribution licencees to operate within the same area, using their own or shared distribution systems. Power sector employees claim this fundamentally alters the distribution landscape by enabling private companies to use public infrastructure without bearing development costs.

They say the provision enables private companies to cherry-pick high-paying industrial and commercial consumers, while public discoms serve low-revenue rural and domestic consumers.

All India Power Engineers Federation spokesman VK Gupta says the “Cross-Subsidy Elimination: Section 61(g) amendment mandates complete elimination of cross-subsidies within five years, especially for Railways, Metro Rail, and manufacturing industries. This requires cost-reflective tariffs across all consumer categories. Cross-subsidies are a social necessity in a country where millions depend on affordable electricity”.

He says domestic and agricultural tariffs could rise by 25 per cent without cross-subsidy protection.

The Centre, however, insists that the Bill only seeks to dismantle longstanding barriers to India’s manufacturing competitiveness, making industrial power more affordable and responsive to market demands, while protecting subsidised tariffs for farmers and other eligible consumers.