With effect from 2 June 2003 India has adopted a new legislation called the Electricity Act 2003, to replace some age-old existing legislation operating in the country. The new act consolidates the position for existing laws and aims to provide for measures conducive to the development of electricity industry in the country. The act has attempted to address certain issues that have slowed reform in the country and consequently has generated new hopes for the electricity industry. This paper reviews the Electricity Act 2003, to highlight how the new features are different from the existing legal provisions and whether these measures have economic rationale.