Solar Power Legal Battle: Amplus SPVs Seek Clarity On Captive Status In Rajasthan’s Proportionality Rule

In a recent development in the energy sector, a petition has been filed by Special Purpose Vehicles (SPVs) incorporated by Amplus Energy Solutions Pvt Limited (AESPL) under the Companies Act, 2013. These SPVs are in the process of establishing solar-based power projects in the State of Rajasthan, totaling 300 MW, and are seeking clarity on the conditions for qualifying as a captive generating plant (CGP).

The petitioners argue that the projects are intended to operate under captive/open access arrangements, supplying power to users within and outside Rajasthan. Given the substantial investment commitment involved, the petitioners seek long-term clarity on the applicability of the Rule of Proportionality on CGPs set up by SPVs, especially in light of the lack of response to their previous inquiries to the authorities.

The Rule of Proportionality, as outlined in Rule 3 of the Electricity Rules, 2005, establishes criteria for a generating plant to qualify as a Captive Plant. The petitioners contend that the rule only imposes two requisites for a generating plant to qualify as a Captive Plant: captive users must hold not less than 26% ownership, and not less than 51% of the aggregate electricity generated must be consumed for captive use.

The petitioners highlight a previous judgment, the TNPPA Judgment, which held that equating SPVs with associations of persons and applying the Rule of Proportionality to CGPs set up by SPVs is not in line with statutory requirements.

On the other hand, the respondents argue that a previous order in the Tesco matter by the Commission has established the applicability of the Rule of Proportionality on SPVs, and the petitioners’ request for an advance ruling is impermissible under the Electricity Act, 2003. They also point out that the matter is pending before the Supreme Court, and until a decision is reached, the earlier judgment by the Appellate Tribunal for Electricity (APTEL) holds.

The Commission, in its observations, notes that the petitioners seek clarity on issues such as the applicability of the Rule of Proportionality, but they have not provided specific details about the shareholding and consumption patterns of the energy generated from their plants. The respondents argue that the issues raised by the petitioners have already been addressed by the Apex Court in a recent judgment related to a similar matter. The Commission ultimately concludes that the issues raised by the petitioners have been settled by the Apex Court, and no further clarification is required from the Commission. It suggests that the petitioners and respondents should adhere to the law laid down by the Apex Court in their future dealings. The petition, along with associated applications, is disposed of with no order as to costs.

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