Parallel energy distribution network : Commission flags ‘cherry-picking’ risk, questions pvt player’s financial capability

The Haryana Electricity Regulatory Commission has received a petition from a private firm seeking a parallel power distribution licence under Sections 14 and 15 of the Electricity Act, 2003. The application raises two primary concerns: the regulator worries that the venture could engage in cherry‑picking, selectively serving high‑value areas while neglecting the broader consumer base, and it doubts the applicant’s ability to meet the financial requirements needed to build and operate a new distribution network. In its preliminary review, the commission noted that DHBVN, the designated distribution company for the region, has been responsible for metering, billing and supply to residential, commercial and industrial customers. The commission has sought clarification on the applicant’s financial capacity and the ability to fund the required infrastructure.

DHBVN, the designated distribution company for the region, has been responsible for metering, billing and supply to residential, commercial and industrial customers. Its monopoly means that any new licence would have to operate alongside its existing network, potentially creating a dual system that could affect tariffs, reliability and consumer choice. The legal framework governing such parallel licences was introduced after the 2003 amendment to the Electricity Act, which aimed to promote competition while preserving the integrity of the existing supply chain.

Sections 14 and 15 of the 2003 Act empower the regulatory commission to issue licences for alternate distribution entities, a provision that has been invoked in other states to allow private participation in power distribution. The language of the sections emphasizes that the new licence must not undermine the financial viability of the incumbent utility and must ensure universal service across the designated area. The commission’s interpretation of these clauses has previously led to scrutiny of proposals that appear to target only profitable segments, a practice it describes as cherry‑picking.

During the review, the commission highlighted that the applicant has not yet demonstrated sufficient financial capacity and has not provided a clear business model for sustaining the required investment. It also pointed out that the existing infrastructure in the districts is already heavily utilized, and any new entrant would need to coordinate with DHBVN to avoid duplication of assets.

If the licence is eventually granted, the region could see increased competition, potentially leading to better service standards and more competitive tariffs. However, critics argue that without stringent monitoring, the new network might focus on affluent neighborhoods, leaving lower‑income areas reliant on the incumbent utility. The commission’s cautious stance reflects its mandate to balance innovation with equitable access.

At present, the petition remains under examination. The commission has set a deadline for the applicant to furnish the requested documentation, after which it will compile a report and recommend either approval, modification or rejection of the licence. No public announcement has been made, and the timeline for a final decision remains uncertain.

The outcome will be closely watched by residents, industry observers and policymakers as the state evaluates whether to allow private competition in its power distribution sector. The decision could set a precedent for future licensing under the Electricity Act and influence how other regions approach the balance between choice and universal service.

Source: Hindustan Times