MoP Invites Feedback on Electricity Amendment Rules

The Ministry of Power (MoP) has issued draft amendments to Rule 3 of the Electricity Rules, 2005, which govern Captive Generating Plants (CGPs) or Captive Power Plants (CPPs) in India. The draft, notified as the Electricity (Amendment) Rules, 2026, invites comments from central ministries, state governments, regulators, power utilities, industry associations, and other stakeholders by January 17, 2026.

Objective of the Amendments

The proposed amendments aim to clarify long-standing ambiguities around ownership structures, captive consumption norms, and verification mechanisms for CPPs, particularly for group companies, Special Purpose Vehicles (SPVs), and Associations of Persons (AoPs). Stakeholders are requested to submit feedback to the Ministry via email.

Ownership and Consumption Norms

Under the draft rules:

Captive users must collectively hold at least 26% ownership in a generating plant.
51% of electricity generated during the assessment period must be consumed for captive purposes.
Ownership now explicitly includes holding companies, subsidiaries, and group entities, recognizing legitimate corporate structures for captive qualification.

Flexible Assessment Period

To accommodate industrial realities, the draft introduces a flexible assessment period, allowing verification to align with operational cycles rather than a fixed financial year. Ownership and consumption entitlements will be calculated using a weighted average shareholding method.

Treatment of SPVs and AoPs

SPVs will be treated as AoPs for verification purposes.
Individual captive users may draw electricity based on operational needs.
Consumption beyond proportionate entitlement counts toward collective verification but not individual captive consumption.
Captive users holding 26% or more ownership are exempt from proportionate consumption restrictions.

Verification Process

Intra-state plants: Verified by nodal agencies appointed by state governments.
Inter-state plants: Verified by the National Load Despatch Centre (NLDC) with Central Government approval.
Disputes may be referred to a Grievance Redressal Committee.
Unit-level verification is allowed, benefiting multi-unit or phased plants.

Cross-Subsidy and Surcharges

Pending verification:

No cross-subsidy surcharge (CSS) or additional surcharge (AS) if a declaration is submitted.
If the plant fails captive criteria, surcharges and carrying costs under the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, apply.

Implementation Timeline

Provisions related to group captive consumption and verification take effect from April 1, 2026.
Remaining amendments are effective immediately.

Stakeholder Consultation

Stakeholders invited to comment include MNRE, CEA, CERC, state energy departments, DISCOMs, and industry associations such as FICCI, CIL, PHDCCI, and ASSOCHAM, along with academic and research institutions.