Review of the electricity act (amendment) bill 2025
Introduction
The Electricity Act (Amendment) Bill, 2025 (the “Bill”) proposes changes to the Electricity Act, 2023 signed by the President of the Federal Republic of Nigeria, Bola Ahmed Tinubu on 8th June 2023 (the “Principal Act”).
The proposed amendments touch on legislative competence between the Federal and State Governments, the licensing interface between the Nigerian Electricity Regulatory Commission (“NERC”) and State Electricity Regulatory Commissions (“SERCs”), consumer subsidy financing, infrastructure protection, industrial relations, institutional coordination, and the transitional arrangements for the ongoing decentralisation of the Nigerian Electricity Supply Industry (“NESI”).
In this Memo, we have identified and assessed the Bill’s key provisions and their implications on the Nigerian Electricity supply industry and its stakeholders.
Background
Prior to 2023, the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999 (“Constitution”) restricted State Houses of Assembly to making laws on the generation, transmission, and distribution of electricity only for “areas not covered by a national grid system” within their States. The Constitution of the Federal Republic of Nigeria (Fifth Alteration) Act, No. 33, 2023 (the “Fifth Alteration Act”) deleted this qualifying phrase from paragraph 14(b), so that States may now legislate over electricity generation, transmission, and distribution within their boundaries, whether or not the relevant areas are served by the national grid.[1]
The Principal Act, enacted shortly after the Fifth Alteration Act, gave statutory effect to this shift. Section 2(2) of the Principal Act preserved the validity of State laws on the generation, transmission, system operation, distribution, supply, and retail of electricity within a State, and on the establishment of a State electricity market and a State regulator.[2] Section 230(2) permits States to establish SERCs with power to license intra state operators, approve their tariffs, of the Principal Act enforced technical and safety standards, and imposed penalties for non-compliance.[3] Section 230(3) of the Principal Act required NERC to transfer regulatory oversight of the electricity market in a State to the relevant SERC within six months of notification by that State, and section 230(8) provides that once such a transfer is completed, NERC has “no further responsibility whatsoever” for electricity market activities carried out in that State.[4]
Rationale for the proposed bill
The Bill's Explanatory Memorandum identifies its purpose as making provision for emerging issues in the sector, enhancing policy and regulatory coordination, strengthening sectoral financing, protecting critical electricity infrastructure, fostering industrial relations, clarifying transitional arrangements, redefining host community engagement by licensees, and correcting drafting errors in the Principal Act.[5]
These stated objectives reflect gaps that have surfaced since decentralisation took effect. There is presently no standing mechanism through which NERC, the growing number of SERCs, and any Joint Electricity Regulatory Commissions (“JERCs”) can coordinate technical standards or resolve cross jurisdictional disputes.
A novel introduction to the Bill is the introduction of a Joint Electricity Regulatory Commissions (JERCs), which provides a practical response to the significant fiscal, human capital, and technical challenges confronting state governments in the development of independent state electricity markets. By enabling participating States to pool regulatory expertise, share administrative costs, and consolidate demand for infrastructure procurement, the JERC model lowers barriers to market entry and enhances the bankability of electricity-sector investments, particularly in smaller or revenue-constrained States. Importantly, the framework preserves the authority of each State to determine its own tariffs, thereby maintaining fiscal autonomy and policy flexibility. In doing so, the Bill strikes a careful balance between delivering the benefits of regional coordination and maintaining the autonomy of participating States over their electricity markets.
Key provisions of the bill
Clarification of federal and state electricity jurisdiction
The Bill confers and affirms the States' legislative competence in terms of electricity generation, transmission, system operation, distribution, supply, retail, State electricity markets, rural electrification, and State electricity policies. The Bill also preserves the Federal Government's exclusive legislative and regulatory authority over activities connected to the National Grid System, which the Bill defines as the unified high-voltage network for nationwide or cross-border power conveyance (the “National Grid System”), alongside the National Wholesale Electricity Market, and the regulation and enforcement of technical standards, operational codes, competition, and climate change requirements[6].
Federal oversight of national grid activities
Under the Bill, State-licensed electricity operators intending to undertake activities connected with the National Grid System are required to obtain prior authorisation from the Nigerian Electricity Regulatory Commission ("NERC"). This ensures that activities affecting the National Grid remain subject to uniform federal oversight, promotes operational consistency, and preserves the integrity and reliability of the interconnected national electricity network[7].
Power consumer assistance fund
The Bill established the Power Consumer Assistance Fund ("PCAF") to subsidise electricity access for underprivileged consumers. The Fund is financed through contributions from designated consumers, National Assembly appropriations, and a portion of NERC's service charge income, and is administered by NERC through a dedicated secretariat and appointed fund managers. The framework also introduces enforcement measures by making the non-payment of mandatory contributions an offence, thereby promoting the sustainability of electricity subsidies for vulnerable consumers[8].
The proposed funding structure is designed to improve the financial sustainability of electricity subsidies by drawing from multiple funding streams rather than relying exclusively on government budgetary support. With high petrol prices forcing consumers away from petrol generators toward grid power, electricity access has become the primary social buffer against transport and fuel price inflation. This approach reduces reliance on occasional government interventions and provides a structured mechanism for supporting vulnerable electricity consumers, particularly in an environment characterised by increasing energy costs and the gradual transition to cost-reflective tariffs.
Enhanced protection of electricity infrastructure
The Bill strengthens the protection of electricity infrastructure by creating specific offences for vandalism and introducing significantly enhanced penalties, including substantial fines and lengthy terms of imprisonment. Section 220A of the Bill creates the offence of unlawfully destroying, damaging, or rendering non-functional electricity infrastructure, including generation plants, transmission lines, substations, transformers, and distribution networks. Section 220B of the Bill prescribes enhanced penalties, including imprisonment ranging from three years to life imprisonment depending on the severity of the offence, as well as fines, forfeiture of equipment used in the commission of the offence, and compensation for damage caused. The enhanced sanctions are intended to deter attacks on critical electricity infrastructure, improve the security and reliability of electricity supply, and safeguard public safety.[9]
Institutional architecture
New sections 228A to 228D is to establish the Forum of Electricity Regulators (“FER”), an advisory and consultative body comprising the Chairman of NERC, as chair of the FER, and the Chairpersons of SERCs and JERCs, with a Vice Chairman drawn from among the latter by rotation or consensus.[10] The FER's Secretariat is serviced by the Secretary to NERC and located in Abuja.[11] The FER accordingly functions as a coordinating body rather than a decision making organ, intended to harmonise regulatory practice as oversight of the electricity sector becomes increasingly devolved to the States.
Section 229, as substituted, establishes the National Electric Power Policy Council (“NEPPC”), a multi stakeholder body chaired by the Minister responsible for Power, comprising one representative of each of the thirty-six States and the Federal Capital Territory, tasked with coordinating policy harmony across the NESI.[12]
There is a new section 229A, which permits two or more State Governments to constitute a Joint Electricity Regulatory Commission (“JERC”) by agreement. A JERC so constituted exercises its own licensing, tariff, investment coordination, and dispute resolution powers over intra state activity within the participating States,[13] in effect enabling States to pool regulatory capacity rather than each maintaining a separate SERC.
This addresses a significant gap in the Principal Act, by introducing a formal legal framework for collaborative electricity regulation among States. While the Act empowered individual States to establish SERCs, it was silent on how neighbouring States could jointly regulate electricity markets or coordinate shared infrastructure. This created uncertainty regarding the legal status and operability of joint regulatory arrangements. Section 229A remedies this by expressly authorising two or more States to establish a JERC which may exercise licensing, tariff regulation, investment coordination, infrastructure procurement, and dispute resolution functions across participating States, enabling jurisdictions with limited fiscal or technical capacity to pool regulatory resources and develop electricity markets on a regional basis.
Essential services and labour restrictions
A new sections 228E to 228G provides for the generation, transmission, system operation, distribution, and supply of electricity to be essential services.[14] On this basis, strikes, lockouts, and picketing within the sector are prohibited, except pursuant to a negotiated Minimum Service Agreement.[15] Contravention attracts a fine of up to N5,000,000 (Five Million Naira) for an individual and N20,000,000 (Twenty Million Naira) for a trade union, in addition to possible proscription of the union under the Trade Disputes (Essential Services) Act 1976. Employees of NERC, SERCs, and JERCs are further prohibited from forming or joining a trade union altogether.[16]
The blanket ban on staff of commissions joining unions is stricter than the restriction applied to other sector workers, and is susceptible to constitutional challenge, given the right to freedom of association guaranteed under the 1999 Constitution.
Government shareholding and capital calls
A new section 228H empowers a “Government Entity Shareholder” in a “State Involved Licensee” to commission an independent review of the operations of the licensee with a view to identify opportunities for improved efficiency and performance, notwithstanding any provision in the constitutive documents, shareholder agreements, or other contracts of the licensee,.
Where a review concludes that additional capital is required, the Government Entity Shareholder may issue a capital call requiring all shareholders to contribute cash equity in proportion to their shareholdings, by written notice specifying the amount, purpose, and a compliance deadline of not less than sixty days. A shareholder who fails to meet the call within the prescribed period is deemed to have irrevocably appointed the Government Entity Shareholder as its attorney to sell its shares to a new investor, with the sale expressed to be final and irreversible. The defaulting shareholder's sole remedy is a claim for monetary damages,[17] and no equitable relief, including reinstatement of shares, is available.
Notably, the sale of the shares overrides any existing security interest or other encumbrance over the defaulting shareholder's shares: the sale remains valid and effective notwithstanding the encumbrance, and title passes to the new investor free and unencumbered. Where the encumbrance is valid and perfected, the purchase price is remitted to the encumbrance holder to the extent the Government Entity Shareholder has actual knowledge of that person's identity, and the Government Entity Shareholder incurs no liability for a good faith payment made on this basis or for non-remittance where it lacks such knowledge.[18]
This section seems counterintuitive considering several reasons, most importantly the bankability of transactions with a licensee. Rather than the dilution or contractual default ordinarily available where a shareholder fails to meet a capital call, section 228H forces the sale of the defaulting shareholder’s shares outright. The sale also overrides any existing security interest over those shares, proceeding with the encumbrance holder’s consent. Secured lenders financing State Involved Licensees should factor this override into their security and intercreditor arrangements, as perfection of a share charge will not, of itself, prevent an involuntary sale under this section
Host community rights and obligations
New sections 228I and 228J set out reciprocal rights and obligations between host communities and generation licensees operating thermal or non-hydro power plants. Host communities are afforded rights to information, consultation, benefit sharing, environmental redress, and grievance mechanisms, while generation licensees are subject to obligations of cooperation, infrastructure protection, community engagement, compliance with community agreements, and tariff payment. Licensees are additionally required to make a community development contribution of up to five per cent of its annual operating expenditure, subject to NERC or SERC approval.[19] This contribution operates as a quasi-statutory levy rather than a voluntary corporate social responsibility measure, and licensees would need to factor this into project financial models at the development stage.
Transitional arrangements
New sections 230A to 230C introduce a “Long Stop Date” of six months from the commencement of the Bill, by which every State must have completed the steps required to assume full regulatory oversight of intra state electricity activity.[20] Where a State fails to do so, NERC must, within seven days of the Long Stop Date, transfer regulatory authority over that State's electricity operations to the Office of the Secretary to the Government of the State.[21] This default mechanism is notable in that it transfers authority to a State executive office rather than reverting oversight to NERC, which may raise questions as to institutional capacity and regulatory continuity in defaulting States.
Section 230C further distinguishes three categories of activity for the purpose of determining regulatory jurisdiction: intra state activity unconnected to the national grid, which falls under exclusive SERC jurisdiction; second, intra state activity connected to the national grid, which remains subject to overriding NERC jurisdiction; and third, interstate or cross border activity reliant on the grid, which falls under exclusive NERC jurisdiction. Section 230C (3) further confirms that the technical standards and inspectorate powers of the Nigerian Electricity Management Services Agency (“NEMSA”) apply nationwide irrespective of any State arrangement, thereby preserving a uniform national floor for technical and safety standards notwithstanding the devolution of regulatory jurisdiction.
Definitional updates
The definition of “national grid” is substituted with “National Grid System” and new definitions are inserted for terms including “Electrical Installations,” “Joint Electricity Regulatory Commission”, “National Wholesale Electricity Market”, “Nigerian Electricity Supply Industry”, and “State electricity markets.”[22] These definitional updates are consequential to, and necessary for the internal coherence of, the substantive provisions discussed above, particularly the JERC and State electricity market provisions.
Implications of the bill on the Nigerian electricity supply industry and its stakeholders
Constitutional Overreach and the Risk of De Facto Recentralisation
The strict definition of “activities on the National Grid System” and the explicit exclusion of State law from the National Wholesale Electricity Market (NWEM) and nationwide technical standards fundamentally resolves the ambiguities of the Principal Act.[23] By insulating cross-border and inter-state bulk power trading from localized subnational regulatory interference, the Bill provides long-term institutional stability for macro-level transmission and generation projects. Legacy Generation Companies (GenCos) and other market participants whose operations extend beyond state boundaries will continue to operate under a uniform federal regulatory framework rather than being subject to potentially numerous state-level requirements.
It is important to note that the breadth of the proposed definition may attract some constitutional concern. Section 2(3) of the Bill reserves, to the exclusion of State laws, matters connected with activities on the National Grid System, including interconnection, injection, wheeling and electricity transactions requiring use of the grid. Given that a significant proportion of intrastate electricity activities may involve some interaction with the national grid, whether for bulk supply, wheeling, reliability or back-up purposes, the provision may be perceived as extending federal regulatory oversight into areas that the Constitution contemplates as falling within State competence, thereby raising potential constitutional questions regarding the scope of the National Assembly’s legislative powers in relation to intrastate electricity activities.
However, this clear separation introduces a dual-layered compliance workflow for subnational developers. Any State licensed operator intending to scale operations by wheeling power across or injecting power into the national network must now secure prior grid interface authorization from NERC, navigating separate federal application requirements, fees, and conditions alongside their home State Electricity Regulatory Commission (SERC) obligations.[24]
In practical terms, the combined effect of proposed sections 2(3) and 230C may also result in a degree of regulatory recentralisation, as grid-connected intrastate electricity activities could remain subject to NERC oversight notwithstanding the transfer of regulatory authority to a SERC. Given that most State electricity networks are connected to, or dependent upon, the national grid for bulk supply, balancing, reliability or emergency support, market participants may encounter concurrent federal and State regulatory supervision even after a transfer order has taken effect.
This jurisdictional overlap significantly diminishes the practical utility of JERCs established under Section 229A. Although JERCs are designed as regional mechanisms for pooling regulatory expertise and coordinating multi-state electricity infrastructure, any regional power arrangement that depends on national transmission assets, TCN substations, or inter-state grid interconnections would fall within NERC's supervisory ambit pursuant to Section 2(3). As a result, rather than facilitating a streamlined regional electricity market, the framework may subject participating States and private investors to a layered regulatory environment requiring compliance with State-level policies, JERC regulations, and NERC approval processes governing grid-connected activities.
Hence, the likely effect on the NESI is increased regulatory complexity and reduced market efficiency. Rather than creating a seamless regional regulatory framework, the overlap may lead to duplicative oversight, higher compliance costs, longer project timelines, and greater regulatory uncertainty for market participants, potentially discouraging investment in regional electricity infrastructure and collaboration between States.
The retention of the Nigerian Electricity Management Services Agency's (NEMSA) nationwide inspection and enforcement mandate is also significant.[25] By preserving uniform technical, safety, and engineering standards across the federation, the Bill mitigates the risk of technical fragmentation and promotes consistency in equipment procurement, infrastructure development, and operational compliance.
Erosion of SERC licensing authority
A more immediate practical consequence of the Bill's approach is its effect on the licensing authority of State Electricity Regulatory Commissions. Under section 63(7) of the Principal Act, SERC licensees are not required to obtain any separate NERC authorisation. The Bill's substitution of section 63(7) imposes a prior authorisation requirement on SERC licensees before they may participate in any grid-linked activity, effectively superimposing a federal permission layer over licences already granted by the SERC.
The practical implication is significant. Operators who obtain a SERC licence in reliance on a completed transfer order may find that they cannot lawfully interconnect with, draw backup supply from, or wheel power through the national grid without first obtaining NERC authorisation. This creates a two-tier licensing burden for a category of operator that the devolution framework was intended to bring squarely within State regulatory control. It is also of particular relevance to mini-grid and distributed generation operators, whose business models frequently contemplate eventual grid interconnection as a project matures, and who may be deterred from investing under a framework that introduces federal gatekeeping at that point.
Narrowing of state regulatory jurisdiction
The three-part jurisdictional division established by Section 230C(1) of the Bill confines SERCs to a narrow category of activity: intra-state operations with no reliance whatsoever on the national grid. This framing sits uneasily with the constitutional position. Distribution of electricity is reserved to the States under both the Fifth Alteration Act and the Principal Act, and the constitutional formulation, "generation, transmission, and distribution to areas within that State", does not contain a grid independence qualification.
In practice, most State distribution networks draw bulk supply from grid-connected generation. If the no-grid-reliance threshold in Section 230C(1) is applied consistently, SERCs may find their effective jurisdiction confined principally to off-grid and embedded generation arrangements. That would be a materially narrower scope than what the Constitution confers and would reduce the devolution framework to something closer to an off-grid regulatory sandbox than a genuine transfer of distribution oversight to the States.
Subnational market readiness and transition deadlines
The introduction of a hard six-month “Long Stop Date” for states to establish the legal and institutional frameworks necessary to regulate their intrastate electricity markets reflects an effort to accelerate the decentralization process initiated under the Principal Act.[26]
The prescribed deadline is likely to place considerable pressure on state governments to enact enabling legislation and operationalize functional regulatory institutions within a relatively short period. While this may expedite market development in proactive states, it may prove challenging for states with limited technical, financial, or institutional capacity.
Crucially, the fallback mechanism, which transfers regulatory power directly to the Office of the Secretary to the Government of a defaulting State means that states failing to meet the deadline will see their electricity markets managed by political executives rather than specialized technical regulators. [27] For market operators and legacy DisCos in those states, this may create transitional regulatory uncertainty and expose market participants in affected states to delays in licensing, tariff administration, and regulatory decision making.
Corporate governance and investor uncertainty
The Bill introduces a mandatory capital call framework that may significantly affect public-private utilities, particularly distribution companies (DisCos) with government shareholding. The proposed framework empowers government shareholders to initiate operational reviews and require proportionate capital contributions from all shareholders where additional funding is required.[28] While this mechanism may improve corporate accountability and financial sustainability, it also increases the financial obligations of private investors and may alter existing shareholder dynamics.
Most significantly, the provision strips private investors of traditional equitable remedies, such as the right to seek court injunctions or share reinstatement in the event of a dispute. By legally converting a financial default into an irrevocable power of attorney to force a share sale to a new investor, the Bill exposes private equity to aggressive state driven divestment. Private shareholders face a highly compressed compliance window to match capital injections, with their legal recourse strictly limited to post-facto claims for monetary damages. This may increase investment risk, particularly for private equity sponsors and foreign investors accustomed to broader shareholder protection mechanisms and could discourage private investment in the NESI.
Investor uncertainty may also arise from the transitional regulatory framework established under the Bill. On a plain reading, the proposed Section 230C(4) provides that existing NERC-issued licences falling within transferred intrastate jurisdiction remain valid, subject to any regularisation requirements imposed by the relevant SERC, and that the SERC assumes regulatory oversight from the effective date of the applicable transfer order. While this is broadly consistent with the savings regime under section 230 of the Principal Act, uncertainty arises from the interaction of proposed sections 2(3), 63(7) and 230C(1) - (3).
In practical terms, a licensee that had assumed its operations fell exclusively within SERC jurisdiction following a completed transfer order may nevertheless be required to obtain additional NERC approvals, and remain subject to NERC's overriding standards and regulatory requirements, where its operations involve interaction with the National Grid System. This potential overlap in regulatory oversight may create additional compliance costs, approval risks and regulatory uncertainty for investors evaluating opportunities in State electricity markets
Stabilization of industrial relations and grid security
The designation of the entire value chain of the NESI, from generation and transmission to system operation and supply, as an "essential service” support the continuous operation of the electricity grid by reducing disruptions arising from labour related activities.[29] By imposing restrictions on industrial actions that could disrupt the operation of critical electricity infrastructure, the Bill seeks to reduce the risk of sector wide disruptions arising from labour disputes.[30] This is expected to improve system stability and operational predictability across the electricity value chain.
While the complete ban on unionization within NERC, SERCs, JERCs insulates the regulatory machinery from labour politics, the statutory mandate for Minimum Service Agreements (MSAs) introduces a continuous layer of collective bargaining.[31] Utility operators are to actively negotiate these frameworks to guarantee uninterrupted power to critical hubs like hospitals and security installations during disputes, shifting labour relations from reactive crisis management to proactive compliance frameworks.
The complete ban on unionization for staff of commissions, however, sits on weaker constitutional footing than the MSA qualified restriction applicable to sector employees generally, and this distinction is worth noting. Sector employees retain a right to unionise, with industrial action merely channelled through a negotiated MSA framework, a restriction defensible under section 45 of the 1999 Constitution as reasonably justifiable in the interest of public safety and public order. By contrast, staff of commissions are denied the right to organise at all, notwithstanding that they operate no infrastructure and their withdrawal of labour carries no comparable risk to grid security. This difference in treatment is hard to reconcile with Bill's stated objective of protecting grid security. A limited restriction applies to sector employees whose roles are essential to maintaining electricity supply, while staff of commissions are subject to an absolute prohibition. Thus, this provision may be vulnerable to constitutional challenge on the basis that it imposes a restriction on the right to freedom of association guaranteed under section 40 of the 1999 Constitution.
In addition, the Bill strengthens protections for electricity infrastructure through the creation of offences and penalties relating to vandalism and interference with power assets. By imposing non-bailable sentences ranging from 3 years up to life imprisonment for acts endangering public order[32], these protections may contribute to lower asset losses, reduced replacement costs, and improved insurability of sector assets. For transmission and distribution licensees, this statutory protection should translate into reduced capital expenditure on asset replacement and lowered physical security overheads.
Increased social obligations and fiscal exposure
The Bill introduces several financial obligations that may have material implications for sector participants. For certain generation companies, particularly thermal and other non-hydro operators, the requirement to contribute up to five percent (5%) of annual operating expenditure towards host community development initiatives represents a significant additional expenses.[33] The obligation is likely to influence project economics, financing assumptions, operational budgeting, and long term investment planning.
The Bill also substantially restructures the Power Consumer Assistance Fund (PCAF) framework. Under the proposed regime, distribution companies will play a central role in collecting and remitting designated consumer contributions to the fund.[34] This effectively places additional administrative and compliance responsibilities on DisCos, requiring enhanced billing, collection, and remittance systems. Given the prescribed sanctions for non-compliance, affected licensees may need to strengthen internal controls and compliance processes to mitigate regulatory and financial exposure.
Federal retention of key regulatory functions
The Bill preserves federal control over several core regulatory functions by extending NERC's overriding jurisdiction to tariff regulation, technical standards, competition and anti-trust matters, and climate related issues in respect of activities connected to the National Grid System.[35] While this approach promotes regulatory uniformity and consistency across the electricity market, it also limits the degree of autonomy that SERCs may otherwise exercise in regulating electricity activities within their respective jurisdictions.
In practical terms, SERCs may find their ability to independently determine tariffs, develop technical requirements, or implement market specific regulatory policies constrained where the relevant activity involves interaction with the national grid. This could result in a degree of overlapping jurisdiction, with market participants required to comply simultaneously with both State level regulatory requirements and overarching federal standards.
The Bill further reinforces federal oversight by confirming that NEMSA’s technical standards, inspection, testing, certification and enforcement powers apply nationwide, regardless of any existing State regulatory arrangements.[36] This is particularly significant given that several States, including Lagos and Niger, have developed their own technical, safety and operational frameworks under their respective electricity laws. Whilst the measure promotes nationwide standardisation and interoperability, it may also create areas of regulatory overlap and require States to align their existing technical regimes with federally prescribed standards.
Inter-state policy harmonization via the forum of electricity regulators
The institutional creation of the Forum of Electricity Regulators (FER) provides a statutory safety valve against fragmented subnational markets. The FER establishes an advisory and consultative bridge between NERC and the various subnational SERCs, facilitating the harmonization of cross-border regulatory policies and resolving inter-state market friction before it escalates into protracted litigation.[37]
Although the FER is described as advisory and consultative, its structure gives NERC permanent institutional control. The NERC Chairman chairs the FER ex officio, the NERC Secretary services its secretariat, and the secretariat sits in Abuja rather than rotating among member States. Its functions, developing harmonised technical standards, drafting model instruments “for adoption and adaptation by SERCs or JERCs,” and serving as the forum for settling technical disputes arising from overlapping jurisdiction, may go beyond passive coordination. In practice, this framework could function as a channel through which NERC shapes SERC regulatory practice, notwithstanding the absence of a formal supervisory power in the text.
Furthermore, the establishment of the JERC allows two or more states to pool resources and legislative powers into a single regional regulatory entity.[38] This enables smaller or less capitalized states to achieve economies of scale, establishing viable regional electricity markets without incurring the prohibitive administrative overhead of running individual regulatory agencies. When coupled with the multi stakeholder composition of the National Electric Power Policy Council (NEPPC)[39], these mechanisms ensure that subnational industrial aspirations remain systematically aligned with federal macroeconomic policies.
Conclusion
The Electricity Act (Amendment) Bill, 2025, represents significant shift from the highly decentralised framework introduced under the Electricity Act, 2023 towards a model that preserves greater federal oversight over strategically important aspects of the electricity value chain. By clarifying federal jurisdiction over activities connected to the National Grid System and maintaining federal control over key regulatory functions, the Bill seeks to promote regulatory uniformity, protect grid integrity, and provide greater certainty for large scale infrastructure investment.
However, the proposed framework also introduces new complexities for States and market participants. SERCs and licensees will be required to operate within a more interconnected regulatory structure, particularly where electricity activities involve interaction with the national grid. The introduction of strict transition timelines and additional federal approval requirements may increase compliance obligations and heighten the importance of effective coordination between federal and state regulatory institutions.
The Bill further reshapes the investment landscape through enhanced capitalisation requirements, expanded enforcement powers, and additional financial obligations imposed across the sector. While these measures are intended to strengthen corporate accountability and improve sector sustainability, they may also increase regulatory and investment risks for private operators and financiers. The long term impact of the Bill will therefore depend on the ability of regulators and market participants to balance the objectives of regulatory certainty, operational efficiency, investor confidence, and subnational market development.
