Power Min proposes to empower regulators to revise tariff suo motto

New Delhi, Oct 10 (PTI) The Power Ministry has come out with a draft bill which seeks to empower state regulators to revise tariff suo motto, sharing the distribution network by multiple discoms and exempting manufacturing, railways and metro from cross-subsidy.

The proposed amendments to the Electricity Act, 2003, are aimed at ensuring affordable, reliable, and clean electricity for all while enabling a seamless and equitable energy transition.

The ministry circulated the draft Electricity Amendment Bill 2025 on Thursday to seek feedback from stakeholders within 30 days from the date of issue.

The ministry explained that despite major structural reforms under the Act, such as unbundling of utilities, competition, and open access, the distribution segment continues to face severe financial stress, with cumulative losses exceeding Rs 6.9 lakh crore.

Regulatory delays have further weakened the sector’s financial viability, while cross-subsidy-induced high industrial tariffs have impacted industrial competitiveness and constrained economic growth, it pointed out.

The ministry stated that the State Governments will continue to have the flexibility to support specific consumer categories by providing advance subsidies on their behalf, ensuring that no consumer group is unduly burdened.

Further, to prevent delays in tariff revisions, which often arise due to late filing of tariff petitions by utilities, it is proposed to empower State Electricity Regulatory Commissions to determine tariffs suo motu (on their own), it stated.

This will ensure that revised tariffs are implemented from 1st April of each financial year, improving the overall financial discipline in the power sector, it added.

The draft bill also provides for allowing distribution licensees to supply electricity through either their own or a shared network, subject to applicable charges and regulatory oversight by the State Electricity Regulatory Commissions.

At present, multiple licensees in the same area are required to maintain separate networks, leading to duplication and excess costs.

The proposed amendments also aim to rationalise electricity tariffs, unlock demand, and reduce logistics costs, thereby strengthening the competitiveness of industries.

The ministry explained that a growing and competitive economy requires affordable and reliable electricity for industries, transport, and enterprises.

However, the ministry explained that high industrial tariffs, cross-subsidies, and rising power procurement costs have weakened the competitiveness of Indian industry, particularly MSMEs.

The bill also proposes to exempt Manufacturing Enterprises, Railways, and Metro Railways from cross-subsidy within five years.

This measure will help lower transport and logistics costs, improve efficiency, and enhance India’s competitiveness in global markets.

The bill also proposes that State Commissions in consultation with State Governments may exempt Distribution Licensees from the Universal Service Obligation (USO) for consumers eligible for Open Access.

At present, Distribution Licensees are bound by a Universal Service Obligation (USO) to supply electricity to all consumers, including those eligible for open access (i.e., above 1 MW).

The bill also proposed to expressly empower the Central and State Governments to frame rules governing captive generation.

This will provide a transparent and stable framework for industries to invest in self-generation and adopt cleaner, more efficient energy options.

The Electricity Act, 2003 already allows individuals and groups to generate electricity for self-consumption (captive generation) without paying open access surcharges to Distribution Licensees.

Captive generation strengthens energy self-sufficiency, reliability of supply, and industrial growth.

To accelerate India’s clean energy transition, the bill proposes to specifically empower the Central Electricity Regulatory Commission (CERC) to introduce market-driven instruments that attract investment, encourage competition, and ensure faster and more efficient renewable capacity addition.

The bill also proposes to introduce provisions whereby the Central Government can set enforceable non-fossil energy consumption obligations in the Electricity Act.

It also proposed to introduce provisions enabling the prescription of uniform benchmark service standards nationwide.

It proposes to cap the assessment period at one year to limit discretion and prevent disproportionate penalties.

Further, it stated the mandatory deposit for appeals against such assessments is proposed to be reduced from half to one-third of the assessed amount or as prescribed by the Appropriate Government.

The appellate authority is also being empowered to waive or reduce the deposit requirement in cases of undue hardship.

The bill also proposes to empower the Central and State Governments to refer complaints against members of CERC and SERCs for failure to perform their duties, and to expand the grounds for removal to include willful violation or gross negligence.

Further, a timeline of 120 days is proposed for the disposal of adjudicatory matters by the Commission to ensure efficiency.

It is proposed to increase the number of members in the Appellate Tribunal for Electricity (APTEL) from three to seven to address the rising case backlog and ensure timely adjudication, thereby enhancing sectoral stability and investor confidence.

It is proposed to empower the Central Electricity Authority (CEA) to frame regulations ensuring cybersecurity of integrated power system operations.

It also proposes to establish an Electricity Council as a high-level institutional mechanism.

Chaired by the Union Minister of Power, with State Electricity Ministers as members and the Union Power Secretary as Member-Convenor, the Council will advise the Centre and States on policy matters, foster consensus on reforms, and coordinate their effective implementation. PTI KKS 1.0.0 MR