Ministry Revises Electricity Rules, Allows Multiple Users Under Group Captive Model

The Ministry of Power, in recent amendments to the Electricity Rules, 2005, has reverted to the previous regulation, allowing collective captive users to hold the minimum ownership of 26% in a group captive open access project.

According to the notification, the words captive user in the sub-rule(1), clause (a), and sub-clause(i) of the rules will be replaced with captive users.

In July, the Ministry issued an amendment changing it to a captive user, mandating every captive power user, even in a group captive structure of open access, to hold a minimum ownership of 26%.

The decision upset many stakeholders who argued that the change would discourage the group captive open access model, which currently allows multiple consumers to participate.

The new amendment, referred to as the Electricity (Third Amendment) Rules, 2023, comes in after various stakeholders had raised the issue with the Ministry, which said it would issue a clarification soon.

The Ministry has also appointed the Central Electricity Authority to verify the captive status of projects supplying power to consumers located in different states to ensure uniformity in the process across all states.

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

The group captive model of open access is the most preferred model by the commercial and industrial segment as it allows them not only to use green energy but also save big on energy bills.

According to the General Review Report 2023 by the CEA, renewable energy (wind and solar) accounted for 9.07% of the total installed captive capacity as of March 31, 2022.

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

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