Norms of captive power generation amended to allow more flexibility

livemint.com:

New Delhi: In a bid to boost captive power generation and streamline the norms, the union ministry of power has amended the regulations saying that a captive power user, must hold a minimum of 26% stake in the captive generating plant. According to the new norms, each captive power user, even in a group captive structure has to hold 26% ownership in the captive generating plant.

Earlier a minimum of 26% was to be collectively held by captive users. Further, if the captive power generating plant is set up by an affiliate company, the captive user would have to hold a minimum of 51% ownership in that affiliate company.

According to Ramanuj Kumar, Partner at Cyril Amarchand Mangaldas, the move would allow subsidiaries of captive users to set up captive generating plants and benefit from cross subsidy surcharge (CSS) waiver, providing more flexibility to captive users. He, however, noted that more clarity is required for the norms.

“It would have a considerable impact in terms of progress and expansion of the captive generation sector," he said. Further, as per the Electricity (Amendment) Rules, 2023, the period of the license of a distribution licensee would be 25 years.  Further, at the end of the 25 years, the license would be deemed renewed unless it has been revoked during the period.

Earlier, the licensees had to apply for renewal of their license after the given timeline. “The licence granted by the Appropriate Commission under section 14 of the Act and the deemed licence under first, second and fifth proviso to said section 14 shall be deemed to be renewed unless the same is revoked: Provided that such renewal, shall be for a period of twenty five years at a time or for a lesser period, if requested by the licensee,"