TNERC Upholds 51% Aggregate Consumption Rule For Captive Power Plant Compliance In Tamil Nadu

The Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) appealed a decision by the Tamil Nadu Electricity Regulatory Commission (TNERC), challenging the captive status of Chettinad Cement Corporation Private Limited’s three power plants. These plants, located in Tamil Nadu, collectively generate 135 MW of electricity and are used to power their cement factories. TANGEDCO claimed that each plant should be evaluated separately to meet the 51% consumption criteria required for Captive Generating Plant (CGP) status under Rule 3 of the Electricity Rules, 2005. If evaluated individually, the Karikkali plant failed to meet the requirement for financial years 2014-15 and 2015-16.

The TNERC ruled in favor of the respondent, stating that aggregate consumption across all three plants should be considered since they belong to the same entity. It clarified that the spirit of Rule 3 prioritizes consumption by a single user across multiple plants. The commission also dismissed TANGEDCO’s claim for a cross-subsidy surcharge of ₹95 crore for non-compliance with CGP status, stating that the respondent satisfied the equity ownership and consumption criteria when aggregated.

The judgment emphasized that the interpretation of captive consumption should avoid anomalies, ensuring fairness between entities operating single versus multiple plants. By allowing aggregation, TNERC upheld that the overall consumption met the required 51% threshold for CGP compliance.