Telangana Electricity Regulatory Commission (TERC) Implements New Procedure For Verifying Captive Generating Plant (CGPs) Status

Introduction

The Telangana Electricity Regulatory Commission (TERC) established a new procedure for verifying the captive status of captive generating plants (CGPs) and their associated captive users within the state. This procedure aligns with the Open Access Regulations, 2024,[1] ensuring CGPs meet the criteria for captive generation based on electricity consumption and equity shareholding.  

Explanation

Objective: This procedure aims to verify the captive status of CGPs and captive users as per regulations outlined in Open Access Regulation No. 1 of 2024.  

• Applicability: This procedure applies to all power plants and end users seeking verification of their CGP and captive user status based on consumption and equity shareholding criteria. Additionally, distribution licensees must submit a consolidated report to the Commission annually for verification purposes.  
• Definitions: The procedure provides clear definitions for key terms like “captive generating plant,” “captive user,” “generating unit,” and “open access regulation.” These definitions reference relevant sections of the Electricity Act, 2003, and Electricity Rules, 2005.
• Verifying Authority: The TERC serves as the verifying authority for CGP captive status. Verification occurs after the financial year concludes based on a consolidated report submitted by distribution licensees in the CGP and captive user’s location.  
• General Conditions: The procedure outlines general conditions for verifying compliance with Open Access Regulations, including allowing captive user consumption through energy storage systems and permitting subsidiary and holding companies of captive users to be considered for captive consumption calculations. Ownership structure changes during the year require detailed documentation for verification.  

Verification Process:

• Annual Verification: CGP status verification occurs annually.  
• Application Submission: CGPs submit an application with necessary documents to the distribution licensee in their area.  
• Affidavit and Documents: CGPs and captive users furnish an affidavit and relevant documents (specified in formats) regarding annual electricity generation, captive user-wise consumption, and equity shareholding for the preceding year.  
• Verification Timeline: The TERC issues communication about the CGP and captive user status within two months of receiving the consolidated report from the distribution licensee.

Ownership and Consumption Criteria Verification:

• Ownership Verification: The procedure details documents required to verify ownership criteria for different CGP ownership structures (company, cooperative society, association of persons, special purpose vehicle). These documents include certificates from chartered accountants and relevant extracts from annual returns.  
• Consumption Verification: The procedure outlines criteria for verifying consumption based on CGP type (single, cooperative society, association of persons, special purpose vehicle). It allows for technical losses in the electrical network and energy storage systems to be included in captive user consumption calculations. The procedure also specifies how to determine aggregate energy generated from the CGP unit and how to consider open access consumption for verification purposes.  

Consequences of Non-Compliance:

• Loss of Captive Status: Failure to meet the required conditions in a financial year results in the CGP losing its captive status and the captive user losing their captive user status.  
• Default by Shareholders: The procedure outlines consequences for shareholders or members defaulting on consumption criteria. Depending on the remaining captive users’ compliance with ownership and consumption criteria, the defaulting shareholder may lose captive user status or the entire CGP may lose its captive status.

Metering Requirements:

The procedure mandates separate interface meters with real-time communication capabilities for each CGP unit, aligning with Central Electricity Authority metering regulations.

Conclusion

The TERC’s new procedure for verifying CGP captive status provides a clear and comprehensive framework for ensuring compliance with Open Access Regulations. This ensures transparency and facilitates efficient verification of captive generation within Telangana.

[1] https://tgerc.telangana.gov.in/file_upload/uploads/Regulations/Draft/2024/Final%20Draft%20proceedure%20for%20verification%20of%20the%20CGP.pdf