Central Electricity Authority Releases Procedure for Verifying Captive Generating Plant Status Across States

The Central Electricity Authority (CEA) has issued a detailed procedure for verifying the captive status of generating plants where the plant and its user(s) are located in different states. This procedure, effective from the financial year 2024-25, was issued on February 10, 2025.

The procedure is established under the Electricity Rules, 2005, as amended on September 1, 2023.

Objective and Applicability

The primary objective is to provide a clear and consistent method for verifying the captive status of generating plants that supply power to users across state lines. This procedure applies to all power plants and consumers seeking verification as a Captive Generating Plant (CGP) and associated Captive User(s) under Rule 3(3) of the Electricity Rules, 2005.

Verifying Authority:

The Director, Legal Division, CEA, is designated as the Verifying Authority for interstate CGPs. Their role is to verify the captive status of generating stations located in one state supplying power to at least one user in another state, ensuring compliance with Rule 3 of the Electricity Rules, 2005. The Verifying Authority will then communicate the verified status to the CGP, Captive User(s), concerned Distribution Licensee(s), State/Joint Electricity Regulatory Commissions, State Load Dispatch Centers (SLDCs), and Regional Load Dispatch Centers (RLDCs).

General Conditions for Verification

The verification process considers the following general conditions:

• CGP Categories: Section 2(8) of the Electricity Act recognizes two categories of CGPs:
  • Single Captive User and
  • Group Captive Users.
• Group Captive User Categories: Only Cooperative Societies and Associations of Persons are recognized as Group Captive Users.
• Cooperative Society Exception: The first proviso to Rule 3(1)(a) of the Electricity Rules, 2005, allows members of a Cooperative Society to collectively satisfy the minimum ownership and electricity consumption requirements.
• Association of Persons Requirements: The second proviso to Rule 3(1)(a) requires Associations of Persons to meet the minimum ownership (26%) and electricity consumption requirements. Critically, they must also consume at least 51% of the electricity generated by the CGP, proportional to their individual ownership shares (not less than 26%).
• Proportionality Test: All Group Captive Users not registered as Cooperative Societies must comply with the proportionality test outlined in the second proviso to Rule 3(1)(a).
• Minimum Ownership Threshold: The 26% minimum ownership threshold must be maintained throughout the entire year (April 1 to March 31).
• Change in Ownership: In case of ownership/shareholding changes, a weighted average principle is applied to ensure compliance with the proportionate electricity consumption requirement. Specific guidelines are provided for calculating this weighted average, particularly when a Captive User exits or joins during the year.

Verification Procedure

1. Verification of CGP and Captive User(s) status is conducted annually.
2. Applicants must submit an application with required documents, including data/information in specified formats, to the Verifying Authority by May 31st each year.
3. Applicants must furnish an affidavit (as per the provided schedule) with details of annual electricity generation, Captive User-wise consumption, and equity shareholding (Formats I, II, and III).
4. Group Captive User applicants must conduct due diligence to ensure all included users are eligible for captive status.
5. The Verifying Authority will issue the captive status within two months of receiving a complete application.
6. The Verifying Authority may request clarifications from the CGP, which must be provided promptly.
7. RLDCs, SLDCs, and Distribution Licensees must assist the Verifying Authority.
8. Applicants must inform the relevant RLDCs, SLDCs, and Distribution Licensees within 15 days of submitting their application.

This detailed procedure aims to ensure transparency and consistency in verifying captive generating plant status across state lines, protecting the interests of both generators and consumers while promoting efficient and compliant power generation and distribution.