Amid opposition from power sector employees, the Haryana Electricity Regulatory Commission (HERC) on Monday granted a 25-year parallel electricity distribution licence to a private company for Gurugram and Nuh districts.Once the licence takes effect, Eleven Power Pvt Ltd will become the first private player to enter Haryana’s electricity distribution sector, which has so far been dominated by two state-owned distribution companies (DISCOMs) — Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN).This will also become the second such instance of parallel electricity distribution licensing in India outside Mumbai, where Tata Power Company Ltd (TPCL), BEST (Brihanmumbai Electric Supply and Transport Undertaking) and Adani Electricity Mumbai Ltd (formerly Reliance Infrastructure) operate as distribution licensees in overlapping areas of the city.The move is expected to give consumers a choice of electricity supplier and introduce competition in a sector traditionally dominated by state-owned utilities. However, it has drawn strong opposition from existing DISCOMs and their employees. The Haryana government, too, has opposed the order and said it will challenge it before the Appellate Tribunal for Electricity, the statutory body established under the Electricity Act, 2003, to hear appeals against regulatory orders.But what is a parallel license? Why has it become so contentious?Impact on existing DISCOMsThe sixth proviso to Section 14 of the Electricity Act, 2003, empowers the appropriate electricity regulatory commission to grant licences to two or more entities to distribute electricity through their own distribution networks within the same geographical area, subject to prescribed conditions. The provision also stipulates that an applicant meeting the requisite criteria cannot be denied a licence merely because another distribution licensee already operates in the same area.Eleven Power was granted the licence under the same provision of the Electricity Act and, therefore, will be required to create its own distribution infrastructure in the area. According to the company’s business plan, it has envisaged a total capital investment of Rs 4,717 crore over five years between 2026-27 and 2030-31.Story continues below this adAlso Read | Gurgaon power problem meets Rs 4,700-crore private ‘solution’. But there are hiccupsIncorporated in June 2025, Eleven Power Private Limited is 99.99% owned by SAS Fininvest LLP, the investment arm of Eleven Group, led by Sunil Sachdeva, who co-founded Medanta – The Medicity in 2004. To develop its distribution network in Gurugram and Nuh, Eleven Power has formed a strategic consortium with Advait Energy Transitions, Vision India Services and HEC Infra Projects.Anoop Singh, founder and coordinator of the Centre for Energy Regulation and Energy Analytics Lab at IIT Kanpur, said while retail supply competition would provide choice to the consumers, adoption of parallel licensing could increase the cost towards electricity delivery infrastructure for the power system as a whole due to duplication of infrastructure and division of consumers between two licensees.“The new licensee will have to establish its own distribution network, while the existing licensee will continue to maintain its infrastructure. With consumers split between the two DISCOMs, the cost of building and maintaining the networks will be spread across a smaller consumer base for each licensee, potentially increasing the cost of electricity delivery for both sets of consumers,” Singh told The Indian Express.“This may impact consumer tariff unless the impact is offset by significant improvement in operational and financial performance of incumbent DISCOM, and significant cost advantage to the new licensee,” he added.Story continues below this adAlso Read | Expert Explains | How India could solve its summertime power cuts problemAnother concern, Singh said, is the mismatch between the fixed costs incurred by electricity distribution companies (DISCOMs) and the fixed charges they recover from consumers through electricity bills.While a substantial portion of a DISCOM’s expenditure remains fixed, irrespective of the volume of electricity sold, most of its revenue depends on how much electricity consumers use. Although electricity bills comprise a fixed charge and a variable component linked to consumption, the fixed charge is often insufficient to cover the utility’s fixed costs.A DISCOM’s fixed costs include capacity payments to thermal power generators, transmission costs, employee salaries, and infrastructure maintenance. These expenses have to be paid on a lumpsum basis, irrespective of DISCOM’s energy sales.As per a recent report by Central Electricity Authority, such fixed expenses account for nearly 38% to 56% of a DISCOM’s total Annual Revenue Requirement (ARR) — the total revenue a utility is expected to recover in a financial year to meet all operational and capital expenditure obligations. However, fixed charges collected from consumers currently contribute only around 9% to 20% of total revenues. As a result, most DISCOMs recover a significant portion of their fixed costs through variable energy charges linked to electricity consumption.Story continues below this adSingh said this mismatch could further strain existing DISCOMs if consumers shift to a new licensee, leaving them with a smaller consumer base over which to recover their fixed costs.Also Read | India is rapidly scaling up renewable energy. Now it needs to store it“Unless there are sufficient efficiency gains by the existing DISCOMs or their tariff structure is rebalanced so that the fixed cost is recovered, the existing licensee may find it difficult to recover their cost if a large number of cross subsidising consumers move out,” he added.Cross-subsidy concernsAnother biggest point of contention was the potential impact of the parallel licence on DHBVNL’s 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.Story continues below this adAlso Read | Why India needs more transmission, battery storage for green energy pushDHBVNL 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 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.Eleven Power, however, disputed these projections, arguing that cross-subsidy was not a permanent entitlement of an incumbent distributor and that its application covered both Gurugram and Nuh, including the latter’s rural and agricultural areas. The company also maintained that its business plan assumed only 2.5% of existing sales would shift to it in 2027-28, with the bulk of its projected growth coming from new electricity connections.