The Haryana Electricity Regulatory Commission has suspended a parallel power distribution license for Eleven Power Private Limited just one week after approval. The state government intervened to prevent infrastructure fragmentation and revenue loss for existing utilities. This decision highlights regulatory risks for private players seeking to enter the state's power sector.
The Haryana Electricity Regulatory Commission (HERC) has halted the entry of private power distribution in Gurugram and Nuh by suspending the license granted to Eleven Power Private Limited. This action, confirmed on October 28, follows a specific directive from the state government issued on October 26, effectively placing the project on hold for the foreseeable future.
Impact on State Power Utilities
The government's decision is rooted in protecting the financial and operational stability of the existing state-owned distribution infrastructure. Officials expressed concern that allowing a second licensee would lead to the practice of selective customer acquisition. In this scenario, a new player might focus on high-revenue industrial and commercial consumers, often described as cherry-picking, while leaving the state utility to manage the service for lower-revenue residential and agricultural users.
This shift, the government noted, could destabilize the cross-subsidy model that keeps electricity affordable for smaller consumers. Furthermore, there were concerns that changing the utility framework so suddenly could result in stranded assets and complicate existing long-term power purchase agreements, which could potentially lead to higher costs for consumers.
Regulatory Uncertainty and Next Steps
Eleven Power Private Limited had received approval for a 25-year distribution license on October 19 and was already preparing for operational deployment. However, the commission has rejected the firm's request for an additional hearing or prior notice. Citing Section 108(1) of the Electricity Act, 2003, the regulatory body stated that the government's direct intervention removes the need for further legal proceedings regarding this specific application at this time.
For investors, this development emphasizes the regulatory risks associated with the power distribution sector in India. While the Electricity Act provides a framework for multiple licensees, state-level policy decisions can significantly alter the operating environment for private operators. The key monitorable for stakeholders will be any further clarification or policy changes from the state government regarding the future of private distribution licenses in the region.