CEA Proposes New Procedure For Multi-State Captive Generating Plants

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The Central Electricity Authority (CEA) has unveiled a groundbreaking draft procedure for verifying the captive status of generating plants that span multiple states. This procedure, bearing the stamp of approval from the Central Government, is poised to foster compliance with Rule 3 of the Electricity Rules, 2005. Acting as the Verifying Authority, the CEA is set to play a central role in this process.


The primary objective of this procedure is to rigorously assess and determine the captive status of generating plants and their captive users scattered across various states. In this context, Captive Generating Plants (CGPs) and their users must adhere to certain specific criteria in order to preserve their captive status. It will be the CEA’s responsibility to scrutinize whether these conditions are met and subsequently communicate the findings to the relevant stakeholders.


Crucially, the CEA has drawn up a draft procedure for the verification of captive status for these multi-state generating plants. Prior to seeking the central government’s final approval, this draft has been made available for public comments. All stakeholders, including the general public, are encouraged to provide their feedback by submitting comments in the specified format to the CEA’s legal division. The deadline for this invaluable input is December 1, 2023.


Key Conditions for Verifying Captive Status

The verification process hinges on several vital conditions, which include:

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Consumption of Electricity: Captive users must directly consume electricity or utilize an Energy Storage System. This consumption criterion extends to subsidiary and holding companies of the Captive user.

Ownership and Voting Rights: Throughout the year, captive users must hold no less than 26% of the ownership with voting rights in the generating plant or identified units for captive use. Additionally, they must account for not less than 51% of the electricity generated annually.

Cooperative Societies: In cases where a CGP is owned by a Cooperative Society, members of the society collectively need to meet both the ownership and consumption criteria.

Special Purpose Vehicles (SPV): When a CGP is earmarked for captive use within a generating station owned by an SPV with multiple generating units, captive users must possess at least 26% of the proportionate paid-up equity share capital with voting rights. Moreover, they must consume a minimum of 51% of the generated energy.

Annual Verification Process

The verification process will be conducted annually. CGPs and their Captive users are required to submit applications and affidavits by September 30 each year. The CEA will then communicate the results within two months of receiving the comprehensive documentation.

Furthermore, the Regional Load Dispatch Centers (RLDC), State Load Dispatch Centers (SLDC), and Distribution Licensees will be instrumental in aiding the Verifying Authority in confirming the captive status of generating plants and their users within their respective areas of jurisdiction.

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Consumption Criteria for Captive Status

The consumption criteria are as follows:

Single Entity: Captive consumption must represent no less than 51% of the net electricity generated on an annual basis.

Cooperative Societies: Members of the society must collectively consume no less than 51% of the net electricity generated annually.

Association of Persons (AoP): In the case of AoP, captive users must consume at least 51% of the electricity generated based on their ownership shares, allowing for a variation not exceeding ten percent.

Auxiliary Consumption, Open Access, and Transition

The procedure also addresses auxiliary consumption, open access, and the transition from non-captive to captive status. For the first year in which a plant is declared a captive generating plant, the date of open access grant serves as the starting point for the financial year. In subsequent years, the total generation between April 1 and March 31 of each financial year will determine the captive status of the generation station.

Consequences of Non-Compliance

If CGPs fail to meet the required conditions within a financial year, they risk losing their captive status, and users will forfeit their concessions. In cases of defaulting shareholders, non-defaulting captive users complying with ownership criteria will retain their captive status.

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Real-Time Monitoring with Interface Meters

To ensure precise monitoring, each unit of a CGP must be equipped with a separate Interface Meter featuring real-time communication capabilities with RLDC and/or SLDC, in accordance with the CEA’s regulations.

The introduction of this new procedure by the Central Electricity Authority marks a significant milestone in the power sector. It provides a robust framework for verifying the captive status of generating plants and their users across multiple states. The procedure is designed to promote transparency, accountability, and compliance with the Electricity Rules, 2005, and is expected to have a profound impact on the determination and maintenance of captive status in the power generation and consumption landscape. It promises a fair and efficient system for all stakeholders involved.

Please view the document below for more details.

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