Watts Next for Jammu & Kashmir
Rewiring India’s
Electricity Future
Watts Next for Jammu
& Kashmir
“The proposed
Electricity Amendment Bill 2025 marks a major shift in how India plans to price
and supply electricity. It enters public discussion at a time when anger over
smart meters and the unfulfilled promise of 200 free units remains strong,
making these issues especially sensitive in the Union Territory of Jammu and
Kashmir.”
Peerzada Mohsin Shafi
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T |
he draft Electricity (Amendment) Bill, 2025 proposes major changes
to the Electricity Act, 2003 to improve the financial health of India’s power
sector, increase competition and bring tariffs closer to actual supply costs.
It opens distribution to real competition by allowing multiple licensed
suppliers to operate in the same area, using the existing poles, wires and
substations instead of building parallel networks. All suppliers will carry a
Universal Service Obligation to ensure no consumer is denied electricity,
though state regulators may relax this requirement for very large consumers
above 1 MW. The government says the reform is essential because Distribution
Companies (DISCOM’s) are in deep financial distress, with losses of about ₹6.9
lakh crore and debt exceeding ₹7.4 lakh crore and has directed states to ensure
at least 20% of power supply is handled by private players as part of the
restructuring package.
Regulators will be required to move toward cost reflective tariffs
so consumer prices match the real cost of generation transmission and
distribution. States and UT’s currently depend on heavy cross subsidies where
industry pays more so farmers and low-income households pay less. The 2025 Bill
plans to phase out these cross subsidies for major users like manufacturing
Indian Railways and metro systems within five years. Subsidies for weaker
groups will continue but through transparent budgeted payments rather than
hidden tariff distortions. This shifts subsidy from electricity bills to the
state budget and possibly to direct benefit transfers. Regulators will also set
wheeling charges for new suppliers that use the existing network. This will
determine whether public distribution companies remain viable and whether
competition works. The Bill also changes governance. It aims to create an
Electricity Council led by the Union Power Minister with state power ministers
to improve policy coordination. State commissions will gain stronger powers to
penalise non-compliance enforce standards and set tariffs when licensees delay
filings. On infrastructure the Bill supports network sharing instead of
parallel lines. It recognises Energy Storage Systems for the first time and
sets up an Electric Line Authority for right of way and compensation issues. It
strengthens clean energy obligations deepens power markets brings in
cybersecurity rules and updates company law references including clearer rules
for captive power plants.
For domestic users, competition among distributors may improve
reliability reduce outages and speed up complaint handling. Shared networks
could lower costs and make expansion easier. Subsidised households will still
receive support through budgeted subsidies and stronger regulation may protect
them when service is poor. Risks remain because cost reflective tariffs could
raise bills where current rates are far below actual supply costs. The presence
of multiple suppliers and shared networks may make billing more confusing at
first. Delays in budgeted subsidies or weak direct benefit transfer systems
could leave the poorest families exposed. For commercial and industrial users
the Bill offers clear benefits. Phasing out large cross subsidies promises
lower and fairer tariffs for major consumers over time. Competition and better
open access can give them more choices and lower losses may reduce the cost per
unit. Yet dangers exist. If only one supplier operates in a practical sense
large users may face a premium last resort tariff. Questions about who pays for
old power purchase agreements will also arise. Some new private distributors
may fail which could disrupt supply unless regulators manage the market
carefully.
The present system under the 2003 Act gives each area one
distributor like in J&K, Power Development Department. Consumers have
almost no choice and tariffs are distorted by cross subsidy. Losses stay high
and regulators often lack capacity. The 2025 Bill moves India toward a modern
system with shared networks multiple suppliers cost based tariffs explicit
subsidies stronger regulators clean energy rules storage recognition and formal
cybersecurity standards. It goes further than the 2021 draft by explaining how
competition network sharing Universal Service Obligation and tariff reform will
fit together. Supporters see it as essential to fix finances and remove
distortions. Critics fear privatisation centralisation and tariff shocks for
vulnerable consumers if subsidies are not well designed.
If the Bill is passed in the near future the pressures will be felt
most sharply in Jammu and Kashmir. The region will enter the reform phase with
high losses widespread theft repeated tariff hikes a weak industrial base
strong public anger over smart and prepaid meters and an unfulfilled promise of
200 free units. Tariffs will emerge as a central worry because the region has
very few large industrial consumers and the cross subsidy base will remain too
thin to cushion households from rising costs. When tariffs move toward real
cost and cross subsidies shrink domestic consumers will face a higher risk of
steep bills especially in remote areas where supply is expensive. Without
strong targeted support through direct benefit transfers the burden will fall
on ordinary homes that already face harsh winters and unstable incomes. The
unresolved 200 free units promise will become harder to sustain and if families
see rising bills while hearing the same promise trust will weaken further.
Smart and prepaid meters will add to the tension. Many consumers
will continue to view them as tools for overcharging and instant disconnection.
Confusing bills poor communication and recharge difficulties will deepen
suspicion. The Bill will expand meterisation through its focus on accurate
billing and loss reduction even though it will not explicitly mandate smart
meters. Without a fair grievance system independent checks and emergency credit
for the poorest resentment will grow. At the same time the Jammu and Kashmir
Electricity Regulatory Commission will face major challenges. It will need to
manage Universal Service Obligation network sharing wheeling charges service
standards and disputes in a region with difficult terrain and political
sensitivities. If the regulator remains weak private suppliers will focus on
profitable towns and leave remote areas to a strained public distributor which
will widen inequality and increase financial stress. Vulnerable families will
struggle with frequent recharges and face quick disconnection while the poorest
will suffer most if cross subsidies decline and budgeted subsidies are not
designed well. Regulators will find it difficult to manage multiple suppliers
shared networks and complex tariff rules. Public distributors will continue
carrying legacy costs and the burden of serving remote zones while private
firms will focus on profitable pockets which will widen regional inequality.
Across India reactions show similar tension. Supporters say the
Bill will bring competition better use of networks lower losses transparent
tariffs and long-term stability. Critics including unions farmers consumer
groups and federalism advocates warn that it may lead to privatisation private
monopolies and tariff shocks if subsidies and direct benefit transfers are not
ready. States that offer free or heavily subsidised electricity like Tamil Nadu
Punjab Rajasthan Himachal Pradesh and Jammu and Kashmir will face tough choices
when cross subsidies are phased out and tariffs become cost based. These states
may shift free power to targeted direct benefit transfers raise tariffs for
more users or strain their budgets with larger subsidies. States with strong
industrial bases will manage the transition better while those with weaker
industry such as Jammu and Kashmir will face greater risks because domestic and
farm users will shoulder more of the burden. The present regime in J&K is
already facing backlash due to the non-fulfilment of election manifestos, such
as the promise of 200 free electricity units, so the road ahead is likely to be
even tougher for them.
Measures like direct benefit
transfers phased tariff increases loss reduction upgraded networks
decentralised renewable energy and strict oversight of any private
participation will be essential to soften the impact.
A larger concern relates to the future of public distribution
companies like KPDCL and JPDCL. The Bill does not shut them down but puts them
in competition with private suppliers who will use the same network by paying
wheeling charges. Poles and lines will remain with the public distributor but
the economics will change. Unions fear a slow repeat of the telecom sector
where private players captured the best markets while public firms declined.
The risk increases if bailouts for debt heavy state distributors are tied to
privatisation or stock market listing. Private companies will only be
interested in commercial areas, which may tilt the sector away from public
utilities over time unless states protect their role as providers of a basic
service.
Seen as a whole the Electricity Amendment Bill 2025 offers both
needed reform and serious potential pain. Nationally it promises honest tariffs
better infrastructure clean energy growth stronger regulation and a path out of
chronic losses and inefficiency. In Jammu and Kashmir it raises the likelihood
of higher household bills deeper tension over prepaid meters fear of
privatisation and the risk that remote areas may be left behind. The outcome
will depend on political choices. If governments communicate clearly protect
the poorest plug system leaks and treat citizens as partners the reform can be
smoother. If they push changes without consultation and rely on jargon while
households see rising bills the law may deepen resentment.
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