Regulator Accords Captive Status to a Wind Project and Asks DISCOM to Refund Charges

The Karnataka Electricity Regulatory Commission (KERC), in a recent order, ruled that the Green Infra Wind Power Generation owned Harapanahalli Wind Power Plant is a captive power project.

The Commission directed the Bangalore Electricity Supply Company (BESCOM) to refund the amount received towards cross-subsidy surcharge, additional surcharge, and differential electricity tax, if any, within three months from the date of the order.

Green Infra Wind Power Generation and its consumers had filed a petition requesting the Commission to declare the Harapanahalli Wind Power Plant in Karnataka as a captive power project for FY 2017-18. It had also requested the Commission to formulate a mechanism to ascertain the captive status of the petitioner’s Harapanahalli Plant.

Background


In May 2018, the Ministry of Power had proposed amendments to the guidelines related to captive power projects in India. As per the amended guidelines, for a project to be considered captive, a minimum of 26% of the project ownership should be of the captive user. Also, at least 51% of the power generated must be utilized for captive use.

Green Infra Power Generation has a 36 MW wind power plant at Harapanahalli, Karnataka. The generator operates four wind power plants, of which the Harpanahalli power project has been identified as a captive power project.

The wind generator, in its submission, said that captive users drawing power from the Harapanahalli project were holding 35.6% of the shares and were consuming nearly 99% of the power generated from the project.

The petitioner also added that BESCOM had wrongfully imposed a cross-subsidy surcharge and electricity tax upon the captive users of the Harapanahalli project.  Meanwhile, BESCOM, in its submission, said that the consumers were not procuring energy in proportion to their shareholding pattern and, therefore, could not be considered captive users.

According to the petitioner, BESCOM had indicated that two captive users, namely  Anjaneya Agrotech and Wadhawan Holdings, had not consumed electricity generated by the Harapanahalli project in proportion to their shareholding in FY 2017-18.

Commission’s analysis

The Commission observed that as per the Electricity Rules, 2005, for a captive power project, 26% of the ownership should be held by the captive users, and the captive users should consume at least 51% of the electricity generated from the project in proportion to their shareholding in the power project.

The Commission noted that to qualify for getting exemption from paying cross-subsidy surcharge, a power generating company must qualify as a captive power generating company under the Electricity Rules, 2005.

The state regulator stated that Green Infra Wind Power Generation is a company incorporated and registered with the registrar of companies. Since the Harapanahalli project does not have any PPA with any DISCOM, nor is it selling power to any third party, The company generated revenue solely from selling the power to its captive consumers in FY2017-18.

Further, all the consumers (except  Anjaneya Agrotech and Wadhawan Holdings) consumed excess energy compared to the shareholding in the power project.

The Commission noted that the Harapanahalli wind Power project owned by Green Infra Wind Power Generation and their consumers (except Anjaneya Agrotech and Wadhawan Holdings) were captive generators and consumers for FY 2017-18.

The Commission asked BESCOM to refund the amount received towards cross-subsidy surcharge, additional surcharge, and the differential electricity tax, if any, within three months from the date of the order.

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