Tamil Nadu Proposes New Rules for Verifying Captive Status of Power Projects

The Tamil Nadu Electricity Regulatory Commission (TNERC) has released draft regulations aimed at tightening the process to verify if power projects qualify as captive generating projects (CGP).

The draft regulations have proposed that distribution licensees conduct an annual verification after each financial year to assess compliance with ownership and consumption criteria per the Electricity Rules, 2005.

CGPs must maintain the minimum 26% ownership requirement throughout the financial year to establish ownership. For group captive projects, the captive users must collectively hold at least 26% equity shares with voting rights.

The framework mandates that captive users consume at least 51% of the aggregate electricity generated annually. For group captive plants, consumption should be proportional to ownership share within a 10% variation.

TNERC has also said that CGPs and users must provide detailed information on equity shareholding, generation, and consumption data within four weeks of the financial year end to improve transparency in the sector.

Captive users will be required to submit a security deposit in the form of a bank guarantee to cover cross subsidy and additional surcharges.

Failure to meet the criteria will result in loss of captive status for that year, leading to the imposition of cross-subsidy and additional surcharges that apply to non-captive projects.

The TNERC has invited comments and suggestions from stakeholders on the draft regulations by July 15, 2024. After considering feedback, the commission will finalize and implement the new rules.

Earlier this month, TNERC released a draft of the Grid Interactive Solar Photovoltaic Energy Generating Systems Regulations, 2024, aimed at streamlining the integration of solar PV systems into the grid and ensuring regulatory clarity.

Previously, it unveiled the Forecasting, Scheduling, and Deviation Settlement and related matters for Wind and Solar Generation Regulations in 2024. These regulations took effect on April 1, 2024.

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