Power Shift: Proposed Reforms in India's Electricity Tariffs

The draft Electricity Amendment Bill, 2025, aims to enforce cost-reflective tariffs and grant regulators the authority to determine tariffs, improving the financial stability of discoms. This proposal seeks to rationalize tariffs, boost demand, and enhance India's economic competitiveness, pending consultations with stakeholders.

The proposed Electricity Amendment Bill, 2025, seeks transformative changes in India's power sector, according to the Ministry of Power. The bill introduces cost-reflective tariffs and grants regulators suo motu powers to set these tariffs to enhance the financial resilience of distribution companies (discoms).

In a recent parliamentary session, Minister of State for Power Shripad Naik emphasized that financial sustainability for distribution licensees is crucial for maintaining reliable and affordable electricity services. Naik highlighted the ongoing consultations with stakeholders to finalize these significant reforms.

Notably, the reform has the potential to break the discom debt cycle, offering improved service delivery, timely maintenance, and infrastructure upgrades while enhancing India's global competitiveness. The bill remains at the consultation stage, with comprehensive discussions before nationwide implementation.

(With inputs from agencies.)