The Ministry of Power (MoP) has introduced amendments to the Electricity Rules of 2005, in the form of the “Electricity (Third Amendment) Rules, 2023.” These amendments have come into effect from 1st September, 2023. They aim to provide clarity on the definition and status of captive users for generating plants.
- Expansion of Captive User Definition: The most notable change introduced by these amendments is the expansion of the definition of captive users. In rule 3, sub-rule (1), clause (a), sub-clause (i), the words “captive user” have been replaced with “captive user(s); and.” This change broadens the scope of captive users under these rules.
- Inclusion of Subsidiary and Holding Companies: The explanation in clause (b) has been updated to include a new provision. It states that the consumption by a subsidiary company or the holding company, of a company that is a captive user, shall also be considered as captive consumption by the captive user. This addition addresses complexities related to corporate structures and their impact on captive consumption.
- Verification of Captive Status: A new sub-rule (3) has been introduced after sub-rule (2). It stipulates that the captive status of generating plants, where both the captive generating plant and its captive user(s) are located in more than one state, will be verified by the Central Electricity Authority. The verification process will follow a procedure issued by the Authority, subject to approval by the Central Government.
Clarifying Captive User Status
These amendments are expected to bring much-needed clarity to the determination of captive user status, especially in cases where generating plants and users span multiple states. By expanding the definition of captive users and removing certain provisos, the government aims to simplify regulatory compliance while ensuring accurate categorization of entities within the electricity sector.