Power Distribution Set for Overhaul: Consumers May Get Choice of Electricity Supplier
NEW DELHI: In a move that could reshape India's electricity sector, the Union power ministry's consultative committee met on Thursday to discuss a framework allowing multiple electricity suppliers to operate within the same distribution network. The proposed reform, outlined in the draft National Electricity Policy-2026, aims to phase out the current monopoly in power distribution and give consumers the freedom to choose their provider, similar to options available in telecom and aviation.
Under existing law, more than one distribution licensee can operate in a given area, but each must build its own network. This leads to duplication of infrastructure, higher costs, and inefficient use of resources, according to government officials. The new proposal would permit new licensees to use existing networks by paying regulated wheeling charges, while retaining the option to develop their own network where allowed by the state electricity regulatory commission.
Union power minister Manohar Lal emphasised that the reform is consumer-centric. "Increased competition is expected to encourage better consumer service, improved reliability, greater innovation and operational efficiency, while ensuring optimal utilisation of existing infrastructure and avoiding unnecessary expenditure," he said at the meeting.
Mumbai is currently the only city where consumers have exercised supplier choice for several years, with coordinated network development under the state electricity regulatory commission. The draft National Electricity Policy-2026 is under consultation and likely to be placed before the cabinet soon. Parliament members on the consultative committee offered suggestions on the framework, the ministry said in a statement.
Existing distribution licensees will continue to own, operate, and maintain their networks under the proposal. The government expects that increased competition will lead to better service quality and innovation, benefiting consumers across the country.
