The Government of India has announced the Electricity (Amendment) Rules, 2026, which change Rule 3 of the Electricity Rules, 2005 about Captive Generating Plants (CGPs). The changes are meant to make things clearer, make it easier for businesses to follow the rules, and make sure that captive power rules are in line with India’s goals for its energy transition and industrial growth.
“Captive power generation has been a key enabling provision under the Electricity Act, 2003,” the government said. “The National Electricity Policy, 2005 recognised captive generation as an important mechanism for ensuring reliable and cost-effective electricity supply to industry.”
Captive power helps industries manage supply constraints and electricity cost fluctuations.
Simplifying Captive Generation for Industries
As industries move away from fossil fuels to meet sustainability goals and save money, the new rules make it clear and easy to understand how captive generation works. Encouraging generation to happen closer to where it is used also cuts down on transmission losses, makes the system work better, and makes the grid more resilient.
“The amendments seek to provide clarity in the implementation of captive generation provisions while maintaining statutory safeguards relating to ownership and consumption,” the notification stated.
Key benefits include easier compliance, reduced regulatory disputes, and support for industrial investment in clean energy.
Key Features of the Amendments
- Clearly Stated Requirements for Ownership
Ownership now includes subsidiaries, holding companies, and other related businesses. This makes sure that corporate group structures don’t lose their captive status. - The Uniform Verification Period
For the whole financial year, or part of it if it’s the first or last year of ownership, the captive status will be checked. - Group Captive Plants through the Association of Persons (AoP)
Users can draw power based on their needs, and any extra power they use will be added to the group’s total consumption. If you own 26% or more of a business, all of your consumption is considered captive. - Nodal Agencies for Checking
State and union territory governments will choose nodal agencies to check things within their own states, and NLDC will check things between states. The Grievance Redressal Committee will settle disagreements. - Treatment of Cross-Subsidy Surcharge (CSS) and Additional Surcharge (AS)
How to Handle Cross-Subsidy Surcharge (CSS) and Additional Surcharge (AS) CSS and AS will not be charged until it is confirmed that the right declarations have been made. If a plant fails verification later, there will be charges and carrying costs. - When to Use
Starting on April 1, 2026, there will be rules about AoP consumption, verification, and CSS/AS treatment. Other changes will take effect right away.
The goal of these changes is to make Indian businesses more competitive, provide reliable and affordable electricity, and help India make the switch to clean energy and reach its goal of Viksit Bharat by 2047.
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