Each User Mandated to Own 26% Shareholding in Group Captive Power Project

The captive user should hold at least 51% of ownership for a project set up by an affiliate company


Each captive power user, even in a group captive structure of open access, must now hold a minimum ownership of 26%, according to the amendments to the Electricity Rules, 2005, issued by the Ministry of Power.

Earlier, the minimum ownership of 26% was to be collectively held by captive users. The amendment implies that only three users can now participate in a project under the group captive model.

Also, if the captive generating project is set up by an affiliate company, the captive user should hold at least 51% of the ownership in that affiliate company.

According to Mercom India Research, there was no clarity until now on the minimum equity stake regarding the group captive model of open access.

With the amendment, the Ministry aims to specify the maximum number of users that can participate in a group captive model and the minimum equity they must hold.

Further, the consumption of electricity by the captive user may be either direct or through an energy storage system.

According to the amendment, where an entity is a deemed licensee, the period of the license will be 25 years.

The license granted by the appropriate commission will be deemed to be renewed unless the same is revoked.

Further, if the commission has renewed the license for a particular period before the notification of these rules, the license will be deemed to be renewed for that particular period.

The tariff for a particular month will be calculated based on the energy scheduled rather than the energy supplied to the end procurer from the central pool (i.e., solar power central pool and wind power central pool) by the intermediary procurer.

In January, the Ministry of Power made changes to the Electricity Rules, 2005. According to the amendments, the surcharge that open access consumers must pay, as determined by the state commissions, should not exceed 20% of the average cost of supply of power.

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