The Telangana Electricity Regulatory Commission (TGERC) 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 issued 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:

• All power plants and end users seeking verification of their CGP and captive user status.
• Distribution licensees submitting consolidated annual reports to the Commission by June 30th each year.

The procedure is grounded in several key legal provisions, including:

• Section 2 of the Electricity Act, 2003, which defines critical terms such as “captive generating plant,” “generating company,” and “generating station.”
• Section 9 of the Act, which outlines the rights and regulations governing captive generation.
• The Electricity Rules, 2005, which set the criteria for a plant to be recognized as a captive generating plant (CGP).

Verification Criteria

Ownership Criteria

• 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.
• For cooperative societies: Members must collectively satisfy not less than 26% ownership throughout the year.
• 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.
• 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.
• 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.

Consumption Criteria

• For single captive users: Consumption should not be less than 51% of the net electricity generated annually.
• For cooperative societies: Members must collectively consume not less than 51% of the net electricity generated annually.
• 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%
• 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.

Verification Process

• CGPs must submit an application with requisite documents to the distribution licensee in their area by May 31st each year.
• The distribution licensee may seek clarifications from the CGP or captive user regarding the submitted information.
• A consolidated report is to be submitted by the distribution licensee to the Commission by June 30th.
• TGERC may seek additional clarifications if needed.
• The verification process should be completed within two months of receiving the consolidated report

Metering and Technical Considerations

• Each CGP unit must have a separate interface meter with real-time communication capabilities.
• Technical losses in the electrical network and energy storage systems are to be included in the energy consumption calculations of captive users.
• The aggregate energy generated from a CGP unit is calculated as gross energy generated minus auxiliary consumption

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 reported 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.

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