Power Ministry Discusses Consumer-Centric Framework for Parallel Distribution Licensing
The Consultative Committee of the Ministry of Power has discussed a proposed framework for parallel distribution licensing aimed at enabling consumer choice, improving electricity distribution services and ensuring efficient utilisation of existing power infrastructure.
July 25, 2026. By Mrinmoy Dey
The meeting was attended by Shripad Yesso Naik, Minister of State for Power, Members of Parliament who are part of the Consultative Committee, the Secretary of the Ministry of Power and senior ministry officials.
Addressing the committee, Lal said that while the Electricity Act, 2003 had successfully introduced competition in electricity generation, transmission and trading, electricity distribution remains the only major segment where competition is still limited. He noted that as India progresses towards the Viksit Bharat @2047 vision, consumers will increasingly expect reliable, affordable and high-quality electricity services comparable to global standards.
During the discussions, the committee noted that although the existing legal framework allows multiple distribution licensees to operate within the same area, each licensee is currently required to establish its own distribution network. This leads to duplication of poles, transmission lines and substations, increases capital expenditure and discourages new investment, resulting in inefficient utilisation of infrastructure.
The proposed framework seeks to address this issue by enabling multiple electricity suppliers to operate using the same distribution network. Under the proposal, existing distribution companies (DISCOMs) will continue to own, operate and maintain the network, while new distribution licensees will be allowed to use the existing infrastructure by paying regulated wheeling charges. They will also have the option to develop their own network where permitted by the respective State Electricity Regulatory Commission (SERC).
The minister highlighted that the detailed implementation mechanism will be formulated by individual SERCs to ensure fairness, transparency and non-discriminatory access to the network. He added that the proposal safeguards the interests of incumbent distribution licensees and their employees while ensuring that all licensees continue to fulfil the universal service obligation under the Electricity Act. The regulatory framework will also prevent suppliers from serving only commercially attractive consumers.
Highlighting the consumer-centric nature of the reform, the Power Minister said that the proposal would allow consumers to choose their electricity supplier in a manner similar to sectors such as telecommunications and aviation. Increased competition is expected to improve service quality, enhance supply reliability, encourage innovation and operational efficiency, while maximising the utilisation of existing infrastructure and reducing unnecessary capital expenditure.
The minister further pointed out that the concept is already operational in Mumbai, where consumers have been able to choose among multiple electricity suppliers while the distribution network continues to be managed in a coordinated manner under the supervision of the State Electricity Regulatory Commission.
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