Govt amends captive power plant rules to clarify ownership provisions

The government has amended electricity rules governing captive power plants, clarifying ownership provisions and verification norms to reduce disputes and improve ease of doing business

The government has amended the electricity rules related to captive power generating plants to remove interpretational ambiguities and improve ease of doing business for the industry.

 

Under the Electricity (Amendment) Rules, 2026, the definition of ownership has been clarified to include subsidiaries, holding companies, and other subsidiaries of the holding company of the entity that establishes the captive generating plant. It also states that the verification of captive status will be undertaken for the entire financial year.

 

A new provision, to avoid charges on captive consumers by distribution licensees pending verification of captive status, has been added. The amendments also require a grievance redressal committee to be constituted to address disputes arising from such verification decisions. 

   

“By clarifying ownership provisions, simplifying rules for group captive arrangements, and establishing a clear verification mechanism, the amendments aim to reduce regulatory ambiguity and disputes,” the power ministry said in a statement.

 

State governments can designate a nodal agency for verification of captive status in cases of intra-state captive consumption with effect from 1 April 2026. For inter-state captive consumption, verification will be undertaken by the National Load Despatch Centre (NLDC). 

 

“The Electricity (Amendment) Rules, 2026 have been introduced to provide greater clarity and flexibility in the framework governing captive power plants so that industries can more easily generate electricity for their own consumption,” the power ministry said in a statement. The amendments seek to align the captive generation regime with modern corporate structures and evolving industrial energy needs, it added.

 

The National Electricity Policy, 2005 recognised captive generation as an important mechanism for ensuring a reliable and cost-effective electricity supply to industry. Encouraging generation closer to the point of consumption helps reduce transmission losses, improve system efficiency, and strengthen grid resilience.