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Rules for captive power plants to be amended

New Delhi: The power ministry will rework amendments to the rules for captive plants to prevent their misuse and abolish undue charges on free electricity trade to provide cheaper energy alternative to industries.

A senior government official said the ministry will soon come out with a fresh draft to strengthen norms. Finance minister Nirmala Sitharaman, in her budget speech, said the Centre will work with states to remove barriers such as cross-subsidy surcharges, undesirable duties on open access sales or captive generation for industrial and other bulk power consumers.

Indian Captive Power Producers Association secretary general Rajiv Agrawal said the government should also address coal availability issues. “It is visionary on part of the finance minister... It is time for the government to remove other discriminations and impediments to global competitiveness too, namely charging captive power generators 20-140% higher coal costs, vis-à-vis other power producers,” he said.

The ministry had, last year, proposed getting rid of loopholes in norms relating to captive and group captive generating power plants following complaints against dummy projects being created to avoid surcharges. The changes could lead to correction in equity and shareholding in over 5,000-mw existing captive power projects.

The government proposed to change the definition of 'ownership' for captive power plants that should now be in terms of value of capital along with the voting rights and not in terms of number of shares only.

Group captive power plants — based on coal, solar and wind — are operational in large numbers in the states of Karnataka, Haryana, Rajasthan, Maharashtra and Tamil Nadu. The concept was evolved by industries to avoid cross-subsidy charges levied on inter-state electricity sale. However, like open access, it is also seen as a threat to state discoms.

Open access as the name suggests refers to enabling buyers to choose source of electricity and giving them right on transmission and distribution system for transfer of power.

States fear losing their high paying industrial consumers to spot markets and thus impose levies on such transactions. Open access was announced as a reform in the Electricity Act 2003.

In the proposed new tariff policy, the government proposes to remove cross-subsidy charges levied on the large power consumers. The Centre proposes to give direct benefit transfers to the targeted consumers. The tariff policy also proposes to penalise gratuitous load shedding by distribution companies.

News Date: 08-Jul-2019

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