Last week, Haryana’s power regulator approved the entry of a private electricity distributor in Gurugram and Nuh districts, in a move that was expected to give greater choice to consumers. On Wednesday, however, it decided “not to proceed further” with rolling out a parallel distribution licence to Eleven Power Pvt. Ltd.The decision, taken on the directions of the Haryana government, came after opposition from both of Haryana’s state-owned power distribution companies (or discoms), which raised concerns about the potential impact of parallel licensing on their finances.What is notable is that the decision comes at a time when the Union government, also led by the BJP, is pushing for a framework that allows multiple electricity distribution licensees to operate in the same area.According to the Centre, this will expand consumer choice, improve service quality and enable more efficient use of distribution infrastructure. Both the Draft National Electricity Policy, 2026, and the Draft Electricity (Amendment) Bill, 2025, retain provisions for parallel licensing. The only such arrangement in India exists in Mumbai as of now.So why has the Haryana government halted the parallel licensing process? What are the concerns surrounding parallel licensing? And what does it mean for the broader push to introduce competition in electricity distribution?Haryana government’s standThe state government, invoking Section 108(1) of the Electricity Act, explicitly told the Haryana Electricity Regulatory Commission (HERC) to not create or operationalise any parallel distribution licence in Haryana.Under Section 108 of the Electricity Act, a state electricity regulator must consider and follow written directions issued by the state government on policy matters involving public interest. Story continues below this adAlso Read | Haryana approves first private power distributor: Why the move has raised concernsIndeed, the Haryana government’s written direction cited concerns over consumer and public interest, the financial implications for state revenues and existing state-owned distribution utilities, and public and employee agitations. The government said it was “gravely concerned” about the impact of the licence on consumers and public interest, adding that the decision was a “complete deviation” from the state’s existing policy. However, the government maintained that it was not, at this stage, examining the correctness of HERC’s findings in its order granting the licence.Centre’s push for parallel licensing Had the license granted to the private company, Eleven Power, taken effect, it would have marked the second instance of parallel electricity distribution licensing in India outside Mumbai, where Tata Power Company Ltd (TPCL), Brihanmumbai Electric Supply and Transport Undertaking (BEST) and Adani Electricity Mumbai Ltd (formerly Reliance Infrastructure) operate as distribution licensees in overlapping areas of the city.While parallel distribution licensing remains rare in India, the Centre has been pushing for a framework to expand its adoption. In July, the Consultative Committee of the Ministry of Power, chaired by Union Power Minister Manohar Lal, deliberated on a proposed framework aimed at promoting consumer choice, improving service quality and ensuring more efficient utilisation of electricity distribution infrastructure. Story continues below this adAlso Read | ‘Government jobs will be finished’: Why Haryana power workers protested private player entryThe sixth proviso to Section 14 of the Electricity Act, 2003, allows the appropriate electricity regulatory commission to grant licences to multiple distribution companies in the same area. However, the existing framework requires each licensee to establish its own distribution network. This can lead to duplication of poles, lines and substations, increase capital expenditure and result in inefficient utilisation of infrastructure.The Centre’s proposed framework seeks to enable competition in electricity supply without requiring new licensees to duplicate the existing physical network.“Under the proposal, existing distribution licensees will continue to own, operate and maintain their networks. New distribution licensees will be able to use the existing network by paying regulated wheeling charges, while retaining the option to develop their own network wherever permitted by the concerned State Electricity Regulatory Commission,” the government had earlier said in a statement. The Draft National Electricity Policy, 2026, which is currently under inter-ministerial consultation, also advocates multiple players in electricity distribution to move away from the existing monopoly structure. Similarly, the Draft Electricity (Amendment) Bill, 2025, proposes changes to enable multiple suppliers to use existing distribution infrastructure more efficiently, eliminating redundancy and reducing overall infrastructure costs. Concerns over parallel licensingStory continues below this adWhile parallel licensing could give consumers greater choice, concerns remain over its potential impact on electricity delivery costs, the finances of existing discoms and cross-subsidies.Parallel licensing could potentially increase electricity delivery costs if it leads to duplication of infrastructure and a division of consumers between two licensees. With each discom maintaining its own network and serving a smaller consumer base, the cost of building and maintaining infrastructure could rise per consumer, potentially pushing up tariffs unless offset by efficiency gains.Another concern is the mismatch between discoms’ fixed costs and the fixed charges they recover from consumers. Fixed costs, including capacity payments to power generators, transmission charges, salaries and infrastructure maintenance, account for 38-56% of a discom’s annual revenue requirement (ARR), according to a recent Central Electricity Authority report. However, fixed charges contribute only 9-20% of their revenue. Also Read | Farming under solar panels: Can agrivoltaics work in India without hurting crop yields?If consumers shift to a new licensee, incumbent discoms could struggle to recover these costs over a smaller consumer base, particularly if high-paying consumers leave.Story continues below this adIn the case of Haryana, the Dakshin Haryana Bijli Vitran Nigam (DHBVN) — one of the two government-owned discoms in the state — had claimed that the parallel license can affect its finances and the state’s cross-subsidy mechanism, under which revenue from commercial and industrial consumers helps subsidise electricity supplied to households and farmers. In its submissions before HERC, DHBVNL argued that Gurugram and Nuh account for 35.23% of its total electricity sales and 42.98% of its revenue of Rs 9,493.75 crore in 2025-26. According to DHVNL, the entry of a private distributor could erode its revenue base if high-paying consumers shifted to the new licensee, leaving it with a greater proportion of consumers who pay subsidised tariffs. DHBVNL estimated that even if 2.5% of existing electricity sales shifted to Eleven Power, the utility could suffer a revenue loss of Rs 424.12 crore in 2027-28. The estimated loss could rise to Rs 1,898.75 crore if 20% of sales shifted, and Rs 4,272.19 crore if the share reached 45%, according to its projections. It had said that the loss of consumers who contribute towards cross-subsidies could increase the financial burden on the remaining consumer base, potentially requiring higher tariffs or greater government subsidies to support domestic and agricultural consumers.