Seeking comments on draft amendments proposed in Rule 3 (i.e, Requirements of Captive Generating Plant) of Electricity Rules, 2005 –reg – EQ

Summary:

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### **Key Proposed Amendments:**

#### **1. Definition of Ownership and Captive User:**
– **Ownership** now explicitly includes equity share capital held directly or indirectly through **subsidiaries, holding companies, and their subsidiaries**.
– **Captive user** is defined to include end-users consuming electricity directly or through an **Energy Storage System**.
– **Special Purpose Vehicles (SPVs)** will be treated as an **Association of Persons (AoP)**.

#### **2. Captive Generating Plant Eligibility:**
– A plant qualifies as a **Captive Generating Plant** if:
– At least **26% ownership** is held by captive user(s).
– At least **51% of electricity generated** is consumed by captive user(s) during the assessment period.
– **Unit-level identification** is permitted: A specific generating unit within a station can be identified as the captive plant, with ownership and consumption requirements applied proportionately to that unit.

#### **3. Assessment Period Flexibility:**
– Assessment period can be a **financial year or any continuous period within it**, as opted by the captive user.
– Where shareholding varies, **weighted average shareholding** during the assessment period will be used to determine proportionate entitlement.

#### **4. Treatment of Association of Persons (AoP) & Group Companies:**
– In an AoP, **each captive user can draw power based on operational needs**.
– **Proportionate consumption limits** apply individually, but:
– If a user holds **≥26% ownership**, the proportionate limit **does not apply** to them.
– Consumption above individual limits still counts toward the **collective 51% requirement**.
– **Group companies** (subsidiaries, holding companies) are treated as a **single captive user** for proportionality calculations.

#### **5. Verification of Captive Status:**
– **Intra-state plants:** Verification by a **State-nominated nodal agency**.
– **Inter-state plants:** Verification by the **National Load Despatch Centre (NLDC)**.
– Appeals against verification decisions lie with a **Grievance Redressal Committee** constituted by the Appropriate Government.

#### **6. Cross-Subsidy Surcharge (CSS) & Additional Surcharge (AS):**
– Pending verification, **CSS and AS will not be levied** if a declaration is furnished.
– If verification fails, **CSS, AS, and carrying cost** (based on Late Payment Surcharge Rules, 2022) become payable.

#### **7. Effective Dates:**
– Most amendments come into force **upon publication**.
– Provisions on **proportionate consumption in group captive arrangements** and **State nodal agency procedures** will come into force on **1st April 2026**.

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