Haryana power reform faces setback as govt opposes private distribution

Haryana's move to allow Eleven Power to compete with state-run DHBVN faces political headwinds and employee protests, raising questions over the future of Open Access in the power sector

Earlier this month, the Haryana Electricity Regulatory Commission (HERC) became the first Indian state to allow a parallel power distribution licence in a major urban area, Gurugram, a privilege so far only available in Maharashtra's capital city of Mumbai.

 

HERC allowed Eleven Power to supply electricity to Haryana’s most prosperous city, a move that was expected to open up competition for the region’s over 8.3 lakh electricity consumers, including households, farms, shops, industrial units, and offices, who would be able to choose between two distribution licensees.

 

The irony is that Haryana will also likely become the first state to walk back its decision, with the state government deciding to issue a “policy direction” to the regulator following widespread protests by the employees of the government-run power distribution company, the Dakshin Haryana Bijli Vitaran Nigam (DHBVN), which has so far had a monopoly on the power distribution network.

 

The episode encapsulates the challenges around providing consumers the option of choosing their provider based on pricing. State energy minister Anil Vij early on said he was opposed to allowing competition in the sector but clothed his argument as one against privatisation. “I am against privatisation because we have invested heavily in infrastructure and the services of our employees are at stake.... We are appealing against the regulator's order and trying to obtain a stay,” he said.

 

Emboldened by Vij's position, DHBVN employees went on a strike, which Vij just stopped short of endorsing. “I urge employee leaders to abandon the strike and instead help us prepare the case... (though) we strongly opposed the company's application before the Haryana regulator,” he said. Nonetheless, he sided with the striking employees, saying the HERC “decision went against us”.

 

Eleven Power, the company chosen to provide a parallel, privately-run distribution network, had not responded to emails and phone calls at the time of publication. However, a source aware of the development said the company has been asking the state government not to issue the policy direction.

 

Under the new policy, Eleven Power's supply will run parallel to DHBVN. It was to be the realisation of open access in the electricity sector, an idea that has remained only on paper in the Electricity Act of 2003.

 

“It was not clear from the HERC order if the competitor could use the same transmission network built up by DHBVN or would need a parallel investment,” said Somit Dasgupta, visiting Professor at Icrier and former Member (Economic and Commercial), at the Central Electricity Authority (CEA).

 

Section 11 of the Electricity Act, 2003, states that  the “appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating  station  in accordance  with  the directions of that Government”.

 

The Act precedes the Electricity Rules, 2005, which gives a similar right to the central government, allowing it to “from time to time (can) issue orders and practice directions in regard to the implementation of these rules and matters incidental or ancillary thereto as the Central Government may consider appropriate”.

 

Open access in electricity means the same thing it does in telecom: consumers have the right to pick from among many players, whether state-run or private. Up until now, only some states have allowed this option to power consumers, albeit only to those who use loads of at least 1 MW. In effect, this choice was limited to medium-scale industries. But in such cases, too, licensees have installed penal clauses to dissuade migration. This is because electricity price is almost always subsidised for households and rural consumers.

 

The HERC order said Eleven Power will enjoy the licence for a period of 25 years under Section 14 of the Electricity Act, 2003, and would cover the Nuh and Gurugram revenue districts and all categories of consumers, including households, farms and businesses.

 

A release by the company noted that electricity demand across Nuh and Gurugram, including Manesar and Sohna, was rising quickly. The projections set out in Eleven Power’s petition, based on growth rates approved by the Commission, show annual electricity sales in the licence area rising from about 12,220 million units in financial year (FY) 2024-25 to about 18,224 million units by FY 2030-31. Many commercial establishments, industrial units, and high-rise residential buildings in the area continue to depend on diesel generators during outages. Across Haryana, nearly 1.3 lakh applications for new connections and load enhancement, involving over 2,400 MW of load, were pending as of October 2025.

 

Eleven Power describes itself as a renewable-focused power distribution company, led by Sunil Sachdeva, a co-founder of the Medanta hospital chain. The other co-founder of Medanta is Naresh Trehan, cardiologist and entrepreneur.

 

The company has claimed in its petition that it will supply electricity on a non-discriminatory basis to all categories of consumers, and to supply on request under Section 43 of the Act, releasing new connections within the timelines specified in the HERC's Electricity Supply Code. The network will be built in phases over five years across all five divisions of the licence area (Gurugram Sub-urban, Gurugram City, Manesar, Sohna and Nuh), with Nuh included from the first phase.

 

In a release after securing the licence, Sachdeva had said: “We will deliver on what we placed before the Commission: reliable supply to every category of consumer, timely new connections, and power drawn predominantly from renewable sources.”

 

Political challenges aside, the key obstacle for the company could be the economics.  While it has claimed it will make a capital investment of Rs 4,717 crore over five years, to be deployed in phases between FY 2026-27 and FY 2030-31 under the Commission’s regulatory oversight, with supply to consumers planned from FY 2027-28, Dasgupta said the necessary investment could be much higher. “The sheer magnitude of investments required for a parallel licensee is daunting. In the case of Haryana, DHBVN has contended that the correct figure should be about Rs 11,000 crore”.

 

Also, while tariffs will be regulated by the HERC, Dasgupta said this too could pose problems for DHBVN. “In case, a parallel licensee is set up, the consumers who migrate to the new licensee don't pay any open access charge. So the old licensee suffers," he pointed out. Eleven Power has claimed that within 60 days of getting the orders, it will submit a detailed implementation plan to the HERC for the first phase and a protocol for consumers who choose to switch.

 

As of now, though, the company appears stranded in the face of strikes that led to long power outages in large parts of Gurugram as well as a reluctant government.