This paper introduces a novel insulated cable designed to enhance the distribution system’s capabilities. Accordingly, high-density polyethylene loaded with varying concentrations of zinc oxide (ZnO) nanoparticles (NPs) ranging from 0.0 to 5 wt% was prepared using the melt-blending technique. Zinc oxide (NPs) is synthesized by using sol–gel technique and their microstructure was examined by X-ray diffraction. The new insulated cable, HDPE nanocomposite loaded with 1 wt% of ZnO, demonstrates a 43% reduction in the relative dielectric constant and a 16.5% improvement in breakdown strength compared to pure HDPE. The observed changes in both the dielectric constant and breakdown strength offer several advantages in electrical applications. These benefits include a decrease in feeder current at the same loading level, mitigation of inrush transients during load switching, and a reduction in earth fault current values, particularly in unearthed distribution networks with ungrounded cables. A comparative study is conducted between the conventional insulating cable based on the original material (HDPE) and the new insulated cable incorporating ZnO nanomaterial at a ratio of 1.0 wt% of the total cable mass per unit length. This comparison utilizes data from two actual medium-voltage distribution feeders. Both actual feeders are simulated using the EMTP/ATP package. The obtained results prove the efficacy of the developed material cable (polymer doped with ZnO NPs) compared to the base material. The peak and duration of inrush current can be cut to 77.3% and 67% of their original values, respectively. The earth fault current can be reduced to 56.5% in ungrounded networks, while substation current under the normal operation can be cut to 84.3% with the same load currents.