Amid farmer concerns, govt prepares to table power Bill in Budget session

The government is preparing to table the controversial Electricity Amendment Bill 2025 in the upcoming Budget session of Parliament. Top sources have told The Tribune that stakeholder comments to the draft Bill had been received and the Ministry of Power would now begin structured meetings with specific groups, including power industry, unions and others.

What Bill seeks to address

Persistent financial losses in discoms due to poor billing efficiency; high aggregate technical and commercial losses

Lack of competition in supply, with consumers tied to a single discom, limiting service quality and innovation

Cross-subsidisation distortions, where industrial users pay inflated tariffs to subsidise other categories, making Indian manufacturing less competitive

State governments will also be engaged on the draft legislation on January 22 and 23.

With farmers, especially across Punjab, concerned that provisions of the Bill may raise power consumption costs exerting additional financial stress on them, government sources said there would be no cost escalation for priority consumers as state governments could continue subsidising them.

Officials said the Bill mandated cost-reflective tariffs and empowered state electricity regulatory commissions to act suo motu when utilities delayed tariff filings. “State governments may continue to provide subsidies to priority consumer groups such as domestic and agricultural consumers and there may not be any increase in cost for such consumers. This ensures that financial discipline and consumer welfare go hand in hand," Union Power Minister Manohar Lal Khattar has said, allaying concerns. He said the Bill sought to enhance the economic competitiveness of the industry.

“By reducing distortions caused by cross-subsidies and surcharges, the Bill aims to support Indian industry, including MSMEs, to grow, expand employment and compete globally. There is a need to make the cost of electricity reasonable for the industries for the benefit of all the citizens in the country," the minister said.

Enhancing efficiency

Bill aims to make Indian industry more competitive by rationalising electricity cost and reducing hidden cross-subsidy

Promotes cost-reflective tariffs to ensure financial viability of the sector, while fully protecting subsidised tariffs for farmers and low-income households

Strengthens regulatory accountability to prevent financial distress in the sector and create a stable, investment-friendly environment

Enables shared network use to avoid wasteful duplication, lower system costs

Focuses on improving supply quality and reliability, and ensuring better coordination between the Centre and states in policy implementation

The thinking is to reform the Electricity Act of 2003 in the wake of poor financial performance of distribution companies (discoms). Power distribution is mostly a public sector monopoly in most states with a single firm serving consumers. Estimates suggest that from 2018-19 to 2023-24, losses of all discoms put together were Rs 3.4 lakh crore.

Electricity being a concurrent list subject in the Constitution, both states and the Centre can legislate. The draft Bill proposes to empower SERCs, in consultation with the state government, to exempt discoms from the obligation to supply large consumers who can procure power at competitive rates from other sources.

The fixed cost burden on discoms associated with supplying electricity to these consumers will be reduced, the Bill states. This move, the government said, would benefit smaller consumers. At a meeting of the parliamentary consultative committee related to the power ministry held recently, Khattar had clarified that large consumers would have the choice to exit after giving notice with reasonable time.

The minister also noted that supporting the increased use of electricity from non-fossil sources was a collective responsibility and a minimum obligation for the use of non-fossil source electricity had been proposed under the Bill.

The Bill includes important operational reforms such as incorporating Right-of-Way provisions directly in the Act. It also proposes enabling distribution network sharing to avoid duplication.

"By allowing sharing of networks, the consumers will be benefitted. Apprehensions about privatisation and increase in cost or adverse effect on employees have no basis. Suitable regulatory and policy measures will be taken to ensure that there will not be any adverse effect on any class of consumers or employees," the minister has said, assuring reasonable compensation to farmers for land used to lay electric lines. The Ministry of Power has issued guidelines for determination of compensation linking it to market rate.