Law and statutory body

Electricity Rules, 2005 and Captive Generating Plants

GS3 EnergyGS2 RegulationPrelims and Mains

In the news since 14 March 2026

Why in news
On 14 March 2026 the Ministry of Power notified the Electricity (Amendment) Rules, 2026. They amend Rule 3 of the Electricity Rules, 2005 on Captive Generating Plants.
What it is
Rule 3 of the Electricity Rules, 2005 sets the conditions a plant must meet to be a captive generating plant under the Electricity Act, 2003. The tests relate to ownership and to the share of electricity consumed by the owners. Captive status matters because captive users are exempt from some charges, such as cross-subsidy surcharge.
Ownership clarified
Ownership now covers subsidiaries, holding companies and other subsidiaries of the holding company of the entity that sets up the plant.
Verification period
Captive status is verified for the whole financial year. For the first or last year of ownership, a part of the year may be used.
26 percent rule in AoP
A member of an Association of Persons holding 26 percent or more ownership is exempt from the proportionate consumption requirement. All its consumption counts as captive.
CSS and AS pending verification
Cross-Subsidy Surcharge and Additional Surcharge are not levied pending verification if users file the prescribed declaration. If the plant fails verification, they become payable with carrying cost at the base Late Payment Surcharge rate.
Grievance redressal
The Appropriate Government will constitute a Grievance Redressal Committee for disputes arising from verification decisions.

Don’t confuse with Cross-Subsidy Surcharge vs Additional Surcharge: Both are charged on open access consumers. CSS compensates for the loss of cross-subsidy from paying consumers. AS covers the discom's stranded fixed costs of power purchase commitments.

Don’t confuse with Electricity Rules vs Electricity Act: The Act of 2003 is Parliament's law. The Rules are delegated legislation made by the Centre under it, so they can be amended by notification.

Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.

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Worth revising until Prelims 2027: most news questions come within two years of the event.

Each time it was in the news

  1. 14 March 2026

    On 14 March 2026 the Ministry of Power notified the Electricity (Amendment) Rules, 2026. They amend Rule 3 of the Electricity Rules, 2005 on Captive Generating Plants.