TNERC Proposes Draft Regulations for Verification of Captive Power Plant Status in Tamil Nadu

Introduction

The Tamil Nadu Electricity Regulatory Commission (TNERC) has proposed the Draft Tamil Nadu Electricity Regulatory Commission (Verification of Captive Status of Generating Plants/Consumers) Regulations, 2024.[1] These regulations aim to establish a clear framework for determining the captive status of power plants in Tamil Nadu, India. The regulations are significant due to the complexities and varying interpretations associated with captive power plants, especially concerning their eligibility for certain benefits and exemptions under the Electricity Act, 2003. The TNERC’s draft regulations are a response to recent rulings by the Supreme Court of India, aiming to clarify and streamline the process of verifying the captive status of power generation facilities.

Explanation (Key Points)

• Captive Generating Plant (CGP): A power plant set up to generate electricity primarily for self-consumption. It can be established by an individual, cooperative society, or association of persons.
• Captive User: The end-user of the electricity generated by a CGP.
• Verification Process: The regulations outline a detailed process for verifying the captive status of a power plant. This involves annual monitoring by the authorized Distribution Licensee, who will assess the plant’s compliance with equity shareholding and consumption criteria as per the Electricity Rules, 2005.
• Ownership Criteria: For a plant to be considered captive, the user must hold at least 26% of the equity share capital with voting rights throughout the year. Different ownership criteria apply to various types of captive users, such as companies, cooperative societies, and associations of persons.
• Consumption Criteria: The captive user must consume at least 51% of the net electricity generated annually. This criterion ensures that the plant primarily serves its own consumption needs.
• Metering and Data Submission: The regulations mandate separate energy meters for each generating unit and consumption unit. Generators are required to submit monthly or quarterly energy generation data to the State Load Dispatch Centre (SLDC) or Distribution Licensee.
• Consequences of Non-Compliance: If a CGP or captive user fails to meet the ownership and consumption criteria, they will lose their captive status for that year. This can lead to the imposition of cross-subsidy surcharges and other applicable charges.
• Dispute Resolution: The regulations provide a mechanism for dispute resolution between Distribution Licensees and captive power producers/users regarding captive status and payment of surcharges.

Conclusion

The Draft Tamil Nadu Electricity Regulatory Commission (Verification of Captive Status of Generating Plants/Consumers) Regulations, 2024, represent a significant step towards clarifying the regulatory framework surrounding captive power plants in Tamil Nadu. These regulations are expected to have a substantial impact on the operation and management of captive power plants in the state, influencing investment decisions and energy consumption patterns.

[1] http://www.tnerc.gov.in//PressRelease/files/PR-240620242358Eng.pdf