Jharkhand Issues Procedure to Verify Captive Status of Power Projects
Power projects and captive consumers will be informed of their status by July 15 each year
Jharkhand State Electricity Regulatory Commission (JSERC) has issued Jharkhand State Electricity Regulatory Commission (Verification of Captive Generating Plants and Captive Consumers) Regulations, 2024.
The regulations aim to specify a methodology to verify the status of captive generating projects and captive consumers when consumers import power from their respective captive generators located either within the state or outside and the consequences of their not meeting the conditions.
Every year, the Commission will check if the captive power projects and their consumers meet the criteria set in these rules by looking at the data provided by the projects and consumers.
By May 15 every year, captive power projects and their consumers must give the Commission a sworn statement in a specific format. This statement should include how much electricity they generated and was used in the previous year, as well as who owns shares in the projects.
The Commission will ask for help from the Regional Load Dispatch Center (RLDC), State Load Dispatch Center (SLDC), and the power distribution companies (DISCOMs) to check if the projects and consumers qualify as captive consumers.
If the Commission does not get the data and documents by the deadlines, they will make decisions based on the information they have.
The Commission will inform the captive power projects and consumers, as well as the distribution companies, about their status by July 15 each year.
For units marked for captive use, their consumption is checked based on the net electricity generated by the power station. This means the total electricity produced minus any extra electricity used for auxiliary purposes.
The net electricity generated will be determined annually at the end of the year.
Verification criteria for various types of captive consumers will be as follows:
- The quantity extent of electricity used for self-consumption should be at least 51% of the net electricity generated in a year for single captive consumers, partnerships, and limited liability partnerships.
- For associations of persons, the electricity consumed for captive use should be at least 51% of the net electricity generated annually. Each member’s share should match their ownership in the power project, with a permissible variation of 10%.
- Members of a cooperative society must collectively consume not less than 51% of the net electricity generated on an annual basis.
- Special purpose vehicles must consume at least 51% of the net electricity generated annually, distributed according to each shareholder’s ownership in the designated units for captive use.
Generation data assessment
When captive power projects and its captive consumers are in the same place:
- For projects: The net generation from the captive power project and consumption by the captive consumer is measured using a meter installed on the generation side.
- For consumers: The electricity consumed is measured using a meter installed on the consumption side.
When captive power projects and its captive consumers are located within the state but not co-located:
- For projects: The generation data is determined based on the actual injection from the captive power projects, as provided by the SLDC.
- For consumers: The consumption data is either the corresponding consumption or the actual consumption, whichever is lower. This is based on the meter reading at the consumer interface with the grid provided by the SLDC and the DISCOM in whose area the consumers are located.
When the captive power projects and its captive consumers are located in different states:
- For projects: The generation data is determined based on the actual injection from the CGP, as provided by the respective RLDC or SLDC.
- For consumers: The consumption data is either the corresponding consumption or the actual consumption, whichever is lower. This is based on the meter reading at the consumer interface with the grid, provided by the concerned SLDC of the recipient states and the DISCOM in whose area the consumers are located.
A single captive consumer must hold at least 26% of the equity share capital with voting rights throughout the year. It must have a certificate from the company secretary to support the shareholding.
For partnership firms or limited liability partnerships, the partners’ ownership in the captive project should be not less than 26% proprietary interest and control over the generating station or power project on an annual basis. They must have a certificate from the company secretary to support their shareholding.
In the case of associations of persons, the captive consumer should hold an aggregate of not less than 26% of the ownership or paid-up equity share capital with voting rights throughout the year. They must have a certificate from a registered chartered accountant to support their shareholding.
For cooperative societies, members should collectively hold 26% of the ownership on an annual basis. They must have a certificate from the district registrar of cooperative society to support their shareholding.
In the case of special purpose vehicles, the captive consumer must hold an aggregate of not less than 26% of the proportionate paid-up equity share capital with voting rights of the units identified for captive use. They must have a certificate from a registered chartered accountant to support their shareholding.
Consequences of failure
Captive consumers must submit a security deposit by July 15 each year in the form of an unconditional and irrevocable bank guarantee. This deposit should be equivalent to 51% of their captive consumption for one year. It serves as a payment security mechanism for estimated charges like cross subsidy surcharge, additional surcharge, and any other charges as decided by the Commission.
The bank guarantee should have a term of 12 months and must be renewed or revised annually by May 31. The renewal or revision should be for an amount equivalent to 51% of the estimated captive consumption or after the completion of captive verification by the Commission, whichever comes first.
If the bank guarantee is not renewed or revised by May 31 before its expiry on July 15, the distribution licensee can invoke the bank guarantee towards cross-subsidy surcharge, additional surcharge, or any other applicable open access charges.
Additionally, if the bank guarantee is not renewed or revised by the specified deadline, it will be forfeited by the distribution licensee for the same purposes mentioned above.
There will be no exemption from the cross-subsidy surcharge and additional surcharge on the electricity consumed by other consumers who receive power from the captive power project but are not captive consumers.
If the captive power project or the captive consumer fails to meet the ownership or consumption criteria specified in the Electricity Rule 2005 and these regulations by the end of the financial year, they will lose their captive status for that year. This loss leads to the imposition of a cross-subsidy surcharge, additional surcharge, and other applicable charges on open access consumers, payable to the distribution company concerned.
In November, the Ministry of Power proposed a draft procedure to verify the captive status of power-generating projects supplying to consumers located across multiple states, defining the ownership and consumption terms for captive power projects in the country.
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