Draft Electricity Amendment Bill, 2025 proposes cost-reflective tariffs to improve discoms' health

New Delhi, Jan 29 (PTI) The draft Electricity Amendment Bill, 2025, proposes cost-reflective tariffs and suo motu powers for regulators to determine tariffs to improve the financial health of discoms, Parliament was informed on Thursday.

The national electricity policy circulated by the power ministry has also provided for an automated mechanism for revision of tariffs in case regulators fail to revise electricity rates annually.

The policy also talks about cost-reflective tariffs for improving discoms' fiscal health.

In a reply to the Lok Sabha, Minister of State for Power Shripad Naik said the central government has issued the draft Electricity (Amendment) Bill, 2025, proposing comprehensive reforms in the power sector.

The financial sustainability of distribution licensees is critical for reliable and affordable electricity. The proposed amendments mandate cost-reflective tariffs, empower commissions to determine tariffs suo motu, effective 1st April each year, Naik said.

The minister said that the proposed reforms also aim to rationalise tariffs, unlock demand, reduce costs, and enhance India's economic productivity and global competitiveness.

Naik said that high industrial tariffs, cross-subsidies, and rising procurement costs have weakened industrial competitiveness.

The bill is currently in the consultation stage, and extensive consultations with different categories of stakeholders are in process.

Upon enactment, the provisions of the Electricity (Amendment) Bill, 2025, shall apply uniformly across all states.

Cost-reflective tariffs will break the discom debt cycle, enabling reliable service, timely maintenance, and distribution network infrastructure upgrades, an official statement said. PTI ABI HVA