Electricity Bill 2025 preserves federal balance, says Centre
Following widespread criticism of the Electricity (Amendment) Bill, 2025, the Union Power Ministry said on Thursday that the bill preserves “federal balance ” and envisages reforms via consultative process.
The Ministry’s response comes after widespread criticism from Central Trade Unions (CTUs) and power employees federations attacking the bill as an attempt to allow backdoor entry of private players and an assault on the federal character of the Constitution.
The Ministry issued a FAQ (frequently asked questions) emphasising that it is a progressive reform aimed at strengthening the power distribution sector through financial discipline, healthy competition, and enhanced efficiency.
“The Bill encourages healthy competition between the Government and Private Discoms in electricity supply under the supervision of SERCs. This will mean better service, greater efficiency, and real choice for consumers,” it added.
On the issue of state’s autonomy, the Ministry explained that electricity is in the Concurrent List, enabling both Centre and States to legislate. The Bill envisages implementation of reforms through a consultative process between them.
“The proposed Electricity Council will serve as a consultative body to build policy consensus. At the same time SERCs will continue to determine tariffs, issue licences, and regulate Intrastate activities. The Bill thus preserves the federal balance, promotes cooperative governance, and strengthens the framework for addressing the challenges of the power sector,” it added.
On allegations of cherry picking by private players, the FAQ explains that government Discoms will continue to operate alongside private licensees in a regulated, level-playing environment. Competition would reduce costs, improve efficiency and service quality.
Each Discom covers all consumers within the State Electricity Regulatory Commission (SERC) defined distribution area – either an entire Municipal Corporation or three adjoining districts or a smaller area only if specifically notified by the Appropriate Government. SERCs regulate these areas, it stressed.
On the charge of the bill leading to higher electricity costs for farmers and common man, the Ministry explained that competition reduces the overall cost of electricity supply by improving efficiency and accountability in supply.
“Shared network usage will eliminate duplication of distribution lines and substations. Under the monopoly electricity supply model, technical and commercial losses are high and often merged under one head, masking inefficiencies and theft,” it added.
When State governments provide subsidised electricity to segments like farmers or domestic consumers, the subsidy burden includes not only the intended social support but also the cost of monopoly operations, it added.
The ministry stressed that Cross-subsidy elimination for manufacturing industries, Railways, and Metros will improve competitiveness and help in job creation.
Besides, hidden cross-subsidies are replaced with transparent and budgeted subsidies (under section 65 of the Act), protecting vulnerable consumers like farmers and poor.
Published on October 30, 2025
