Rewiring India’s Electricity Future: Watt’s Next for Jammu & Kashmir

The 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 UTs 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.

Peerzada Mohsin Shafi hails from Anantnag and is an infrastructure columnist.