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					</table>The Telangana Electricity Regulatory Commission (<a href="https://www.tgerc.telangana.gov.in/" target="_blank" rel="noopener">TGERC</a>) has approved the procurement of 4,000 MW of solar power and the associated power purchase agreements (PPAs) from projects under Component-A of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM).
Background
The Southern and Northern Power Distribution Company of Telangana filed a petition seeking approval to procure 4,000 MW of solar power under Component-A of the PM-KUSUM program for 25 years.
The Commission conducted a public hearing held on April 17, 2025, attended by 77 stakeholders. Of these stakeholders, 20 submitted their feedback.
A key concern was that the Ministry of New and Renewable Energy initially approved allocating 4,000 MW of decentralized solar power under Component-A of PM KUSUM, but later revised it to 1,000 MW.
Concerns were also raised about challenges in identifying sufficient land to set up substations for larger capacities. Some stakeholders suggested a revision of the prefixed tariff of ₹3.13 (~$0.037)/kWh due to increased project costs, currency depreciation, and financing challenges.
Another concern was about the capacity utilization factor (CUF) of 19%, which stakeholders said was excessive given Telangana’s solar conditions. They sought a more attainable CUF target or flexible penalties.
The stakeholders also requested the Commission grant the expression of interest (EoI) and the Model Lease Agreement to procure the 4,000 MW of decentralized power.
Commission’s Analysis
TGERC acknowledged the stakeholders&#8217; concerns about capacity, land allocation, and the tariff issue. It maintained the prefixed levelized tariff, emphasizing that tariff stability will avoid disrupting ongoing projects.
It observed that since modifying tariffs might disturb stakeholders, it postponed any adjustments.
The Commission also found that Telangana will face an energy deficit from the financial year (FY) 2028 onwards. It noted that although the state had a surplus for FY 25 and FY 26, it was only available in certain blocks.
Regarding procedural and implementation challenges, the Commission directed Telangana Renewable Energy Development Corporation (TGREDCO) and the state’s distribution companies (DISCOMs) to prepare and publish the ‘frequently asked questions’ and ‘standard operating procedures’ addressing all raised issues in English and Telugu on their websites.
It also encouraged forming coordination committees and single-window clearance systems to streamline project implementation and support farmers effectively. The Commission noted that TGREDCO would convene meetings with solar power generators to clarify concerns.
The Commission highlighted the necessity for a comprehensive strategy concerning substation capacity allocation and instructed the DISCOMs to implement measures to effectively absorb generated power, minimize reverse power flow, and ensure grid stability.
TGERC approved the procurement of 4,000 MW solar power and the associated PPAs while denying post-facto approval for the EoI and the Model Lease Agreement since it is outside its jurisdiction.
In December last year, TGERC <a href="https://www.mercomindia.com/telangana-new-procedure-captive-plants" target="_blank" rel="noopener">issued</a> a comprehensive procedure for verifying the status of captive power-generating projects and their associated captive users within the state.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

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					</table>The Telangana Electricity Regulatory Commission (<a href="https://www.tgerc.telangana.gov.in/" target="_blank" rel="noopener">TGERC</a>) has issued a comprehensive procedure for verifying the status of captive power generating plants (CGPs) and their associated captive users within the state.
The Commission <a href="https://www.mercomindia.com/telangana-issues-power-plant-verification" target="_blank" rel="noopener">issued</a> a detailed draft procedure in September.
Key Objectives and Applicability
The primary objective of this procedure is to verify the status of CGPs and captive users located in Telangana.
This procedure applies to:
<ul>
<li>All power plants and end users seeking verification of their CGP and captive user status.</li>
<li>Distribution licensees submitting consolidated annual reports to the Commission by June 30th each year.</li>
</ul>
The procedure is grounded in several key legal provisions, including:
<ul>
<li>Section 2 of the Electricity Act, 2003, which defines critical terms such as &#8220;captive generating plant,&#8221; &#8220;generating company,&#8221; and &#8220;generating station.&#8221;</li>
<li>Section 9 of the Act, which outlines the rights and regulations governing captive generation.</li>
<li>The Electricity Rules, 2005, which set the criteria for a plant to be recognized as a captive generating plant (CGP).</li>
</ul>
Ownership Criteria
<ul>
<li>For a single captive user: Not less than 26% of the ownership with voting rights must be held by the captive user throughout the year.</li>
<li>For cooperative societies: Members must collectively satisfy not less than 26% ownership throughout the year.</li>
<li>For Association of Persons (AoP): Captive users must hold in aggregate not less than 26% of the ownership or paid-up equity share capital with voting rights throughout the year.</li>
<li>For Special Purpose Vehicles (SPV) or companies: Captive users must hold in aggregate not less than 26% of the proportionate paid-up equity share capital with voting rights of the units identified for captive use.</li>
<li>For a partnership firm, the ownership must represent at least 26% proprietary interest and control over the generating station or power plant. Additionally, the consumption of energy generated must be at least 51% on an annual basis, according to this procedure.</li>
</ul>
Consumption Criteria
<ul>
<li>For single captive users: Consumption should not be less than 51% of the net electricity generated annually.</li>
<li>For cooperative societies: Members must collectively consume not less than 51% of the net electricity generated annually.</li>
<li>For AoPs: Captive users shall consume not less than 51% of the electricity generated, in proportion to their ownership contribution, within a variation not exceeding 10%</li>
<li>For SPVs, captive users must consume at least 51% of net electricity generated annually, in proportion to their shares in identified captive units, within a 10% variation. For LLP/partnership firms, captive users must consume at least 51% of net electricity generated annually.</li>
</ul>
Verification Process
<ul>
<li>CGPs must submit an application with requisite documents to the distribution licensee in their area by May 31st each year.</li>
<li>The distribution licensee may seek clarifications from the CGP or captive user regarding the submitted information.</li>
<li>A consolidated report is to be submitted by the distribution licensee to the Commission by June 30th.</li>
<li>TGERC may seek additional clarifications if needed.</li>
<li>The verification process should be completed within two months of receiving the consolidated report</li>
</ul>
Metering and Technical Considerations
<ul>
<li>Each CGP unit must have a separate interface meter with real-time communication capabilities.</li>
<li>Technical losses in the electrical network and energy storage systems are to be included in the energy consumption calculations of captive users.</li>
<li>The aggregate energy generated from a CGP unit is calculated as gross energy generated minus auxiliary consumption</li>
</ul>
If a CGP fails to meet the required conditions in a given financial year, the generating plant will no longer qualify as a CGP, and the captive user will lose its status as a captive user.
However, this cessation is applicable only to the specific financial year in question.
Mercom earlier <a href="https://www.mercomindia.com/regulations-delays-telangana-open-access-solar" target="_blank" rel="noopener">reported</a> that at a time when solar open-access installations are gaining traction across the country, developers with small-capacity projects in Telangana say the inordinate delay in adhering to regulatory frameworks by distribution companies is creating bottlenecks.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates </a>to ensure you don’t miss any critical updates from the renewable industry.

Telangana Unveils New Procedure for Verifying Captive Generating Plants

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					</table>The Telangana State Electricity Regulatory Commission (<a href="https://www.tgerc.telangana.gov.in/" target="_blank" rel="noopener">TGERC</a>) has allowed an additional surcharge of ₹1.09 (~$0.012)/kWh for open access consumers for the second half (2H) of the financial year (FY) 2024-25.
The additional surcharge will be levied on the quantity of electricity scheduled.
The additional surcharge will not apply to open access consumers wheeling power from their captive power projects.
Background
In a suo motu order issued on September 18, 2020, the Commission told distribution companies (DISCOM) to submit filings to determine the additional surcharge for the first half of the year.
Accordingly, the DISCOMs filed a petition to determine an additional surcharge for 2H FY 2025 (October 2024 to March 2025.)
The DISCOMS filed the mechanism for determining stranded capacity, along with the approved methodology and terms and conditions for levying an additional surcharge on open access users, to meet their fixed cost commitment arising from its supply obligations.
The DISCOMs said that the average stranded capacity due to open access consumers for the six months (October 2023 to March 2024) considering the 15-minute block-wise data, is 23.21 MW.
The fixed charges paid to the generators are ₹63.92 billion (~$761.24 million) in 2H FY 2024, and the average long-term available capacity is 9093.12 MW. The average fixed charges are ₹7 million (~$83,365)/MW.
Accordingly, the fixed charges for a stranded capacity of 23.21 MW work out to ₹163.1 million (~$1.94 million).
The transmission charges paid by the DISCOMs for 2H FY 2024  are ₹31.98 billion (~$380.86 million), and the scheduled energy for that period is 46040.41 MU. The actual transmission cost is ₹0.69 (~$0.008)/kWh.
The HT distribution wheeling charges computed per the Commission&#8217;s directions in the additional surcharge order for 2H of FY 2025 work out to ₹0.17 (~$0.002)/kWh.
The total T&amp;D costs are ₹0.87(~$0.002)/kWh.
The demand charges recovered by the DISCOMs from open access consumers are ₹1.61 billion (~$19.17 million).
The Commission directed the DISCOMs to exclude revenue recovery for the LT network since the distribution charges of the LT network are not considered on the expenditure side. Accordingly, net demand charges considered in additional surcharge calculations work out to ₹1.19 billion (~$14.17 million).
The demand charges are to be adjusted/(recovered) from open access consumers for a total of ₹57.3 million (~$682,409).
The net stranded charges of ₹105.9 million (~$1.26 million) are considered for calculating the additional surcharge.
The projected open access sales for 2H FY 2024 are 66.05 MU pertaining to open access sales other than captive transactions for the period between October 2023 to April 2024.
Accordingly, the DISCOMs requested the Commission to approve the additional surcharge of ₹1.60 (~$0.019)/kWh for 2H FY 2025.
Commission’s analysis
The commission approved the long-term available capacity of 9093.12 MW as proposed by the DISCOMs.
The commission observed that the DISCOMs followed the approved methodology of the average 15-minute time-block data over six months.
However, the Commission approves the stranded capacity due to open access as 25.19 MW, against the DISCOMs’ claim of 23.21 MW.
The DISCOMs claimed that the fixed charges paid from October 2023 to March 2024 amounted to ₹63.92 billion (~$761.24 million).
After reconciliation with audited annual accounts and deducting the fixed charges of ₹59.48 billion (~$708.37 million), which were already considered for 1H FY 2025, the Commission considered the fixed charges paid as ₹60.26 billion (~$717.66 million) for 2H of FY 2025. The long-term available capacity is 9093.12 MW, resulting in average fixed charges of ₹6.63 million (~$78,968)/MW.
Accordingly, the fixed charges for stranded capacity have been computed as ₹166.9 million (~$1.98 million).
The Commission refuted DISCOM&#8217;s claims that fixed charges would vary as the fixed charges paid were recruited.
It determined the transmission charges paid by the DISCOMs to be ₹30.66 billion (~$365.14 million) against ₹31.98 billion (~$380.86 million), with the scheduled energy remaining at 46040.41 MU. Consequently, the transmission charges have been calculated as ₹0.666 (~$0.007)/kWh.
The total transmission and distribution charges are ₹0.8396 (~$0.01)/kWh.
The transmission and distribution charges payable by the open access consumers work out to ₹1.1 billion (~$13.10 million).
The commission noted that the DISCOMs&#8217; demand charges from open access consumers amount to ₹1.61 billion (~$19.17 million). Following the Commission’s directions, the DISCOMs excluded the revenue recovery related to the LT network from the total demand charges recovered from open access consumers and claimed ₹1.19 billion (~$14.17 million) as net demand charges.
The demand charges to be adjusted/(recovered) from open access consumers total ₹94.7 million (~$1.12 million).
Based on the changes in the demand charges, the net stranded charges are ₹72.2 million (~$859,859).
The Commission approved the additional surcharge for 2H FY 2025 at ₹1.09 (~$0.012)/kWh.
However, the additional surcharge will not apply to open-access consumers wheeling power from captive power projects. It will not apply if fixed charges have been paid by  Green Energy Open Access (GEOA) consumers. It will not be levied if the power produced from a waste-energy project is supplied to the GEOA consumer, green energy is utilized to produce green hydrogen and green ammonia, and electricity produced from offshore wind projects is provided to the GEOA consumer.
Recently, the Commission <a href="https://www.mercomindia.com/telangana-issues-power-plant-verification" target="_blank" rel="noopener">issued</a> a detailed draft procedure for verifying the captive status of power-generating plants and their users in Telangana.
In March 2024, it also <a href="https://www.mercomindia.com/telangana-for-open-access-power-consumers" target="_blank" rel="noopener">issued</a> an order outlining the process for identifying stranded capacity and terms for imposing an additional surcharge on open-access consumers.

Telangana Commission Sets ₹1.09/kWh Additional Surcharge for Open Access

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