Ministry of Power reverts rule on captive power

07 Sep 2023 CW Team

The Ministry of Power has made amendments to the Electricity Rules of 2005, reverting to the previous regulation. This change allows collective captive users to maintain a minimum ownership of 26% in a group captive open-access project. The Ministry's notification specifies that the term "captive user" will be replaced with "captive users" in certain sections of the rules.

In July, the Ministry issued an amendment that required every captive power user, even in a group captive open access structure, to have a minimum ownership of 26%. This decision was met with criticism from various stakeholders who argued that it would discourage the group captive open access model, which currently allows multiple consumers to participate.

The latest amendment, known as the Electricity (Third Amendment) Rules, 2023, comes after several stakeholders raised concerns with the Ministry. The Ministry had promised to provide clarification on the matter.

Additionally, the Ministry has appointed the Central Electricity Authority to verify the captive status of projects that supply power to consumers in different states. This move aims to ensure consistency in the process across all states.

Furthermore, the Ministry has allowed power consumption by the subsidiary or holding company of the captive user to be considered as captive consumption by the captive user.

The group captive model of open access is highly favoured by the commercial and industrial sectors because it enables them to use clean energy and reduce energy costs significantly.

As per the General Review Report 2023 by the Central Electricity Authority (CEA), renewable energy, including wind and solar, made up 9.07% of the total installed captive capacity as of March 31, 2022.

In July of this year, the Madhya Pradesh Electricity Regulatory Commission designated the Madhya Pradesh Power Transmission Company as the authority responsible for determining the captive status of captive generating projects and users in the state.

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