Electricity Amendment Bill strikes federal balance, guarantees a ‘level playing field’

NEW DELHI: The Electricity (Amendment) Bill proposes important reforms to bolster competition and ensure universal access to power, along with state autonomy through cooperative governance. It brings clarity to the roles of the Centre and the states in their powers, thus reinforcing the federal balance while enhancing efficiency and accountability in the entire power sector.

Under the new provisions, State Electricity Regulatory Commissions (SERCs) will continue to regulate the supply of electricity within the states concerning adjoining districts or smaller areas notified by the respective governments. The regulator will also be required to specify cost-reflective tariffs for all licensees so that they are financially viable and transparent.

A major feature of the Bill is the Universal Service Obligation (USO), in which every licensed distributor is obliged to serve all consumers in its area without discrimination. This covers farmers, low-income households, and other subsidised categories who will continue to get state-backed subsidies. However, large consumers, generally those with power requirements above 1 MW, may be exempted from the USO by SERCs, enabling them to procure electricity directly through open access.

To sustain quality of service, SERCs would also set performance standards on reliability, voltage, and outage frequency. Regulators will have powers to penalise or revoke licences in cases of persistent non-compliance.

In a bid to balance consumer choice with system stability, the Bill allows distribution licensees to act as suppliers of last resort for large consumers. In such cases, power will be supplied at a premium rate over the cost of supply to ensure no financial losses to the licensee.

The proposed Electricity Council is a consultative body, and the government is trying to dispel apprehensions

related to centralisation. The government has described electricity as a subject of the Concurrent List, on which both the Centre and States can legislate. Officials said the bill “preserves the federal character of India’s power sector, strengthens the autonomy of states, and

promotes a fair, transparent,

and consumer-friendly electricity market.”