Abstract

The Electricity Act, 2003 allowed freedom for the captive power generators and captive
consumers. Till couple of years after the Electricity Act, 2003, the captive power sector was
closed for any external investment and the growth was not enthusiastic. A few of the states
had allowed sharing of a power plant among the consumers subject to rigid rules on
consumption, investment and ownership. Excess capacity could not be economically
exploited and the electricity boards had a tight grip over the excess power available in the
captive system and paid a nominal tariff. This research paper touches all the rules and
regulations regarding the tariff policy in the group captive area of the electricity sector.
Group captive power plant, unlike an individual power plant, is unique structure where a
developer sets up a power plant for collective use of many industrial consumers who should
have 26% equity in the plant and must consume 51% of the power produced. Section 38, 39
and 40 of the Electricity Act, 2003 made it mandatory for the Central Transmission Utility
(CTU) and the State Transmission Utility (STU) to provide non discriminatory open access to
the captive generator for the use of transmission system for his/their own use without any
surcharge. The Group Captive policy is a boon for the industrial consumers. Industrial
consumer segment is growing at a fast pace, which does not want to depend on the state
utilities for its power needs because they are expensive and unreliable. This paper clears the
picture of how Group Captive system is helping the industrial sector to gain cheap electricity
for their personal purpose. These are especially beneficial for small and medium scale
industries that do not have the wherewithal to set up or manage their own power plants but
need power to run their businesses. This research paper deals with regulatory framework of
the Group Captive system in India, how it is helping in the generation of electricity? And
how it can be improved?

Keywords: Group Captive, Electricity, Tariff, Central Transmission Utility, State

Transmission Utility, Power Plant, Industrial Consumers.
 Synopsis

Topic Title: Regulations of Group Captive Arrangements in India.

Objective: To study the mechanism behind the Group Captive system in the electricity sector
of India. This research paper focuses on the legal framework behind the Group Captive
arrangements of India as well as in the different states of India, its tariff policies and how can
this be improve.

Literature Review:

1. ELECTRICITY SECTOR IN INDIA, ALOK KUMAR & SUSHANTA K.

CHATTERJEE, 2012
2. INDIAN ELECTRICITY SECTOR UNDER REGULATORY REGIME, PRATIK
BISWAS & SUKANYA MANDAL, 2019
3. GUIDE TO THE ELECTRICITY LAWS, NAUSHIR BHARUCHA, 2017
4. COMMENTARIES ON THE ELECTRICITY ACT, 2003, K. K. MITRA, 2017
5. ELECTRICITY ACT, 2003 ALONG WITH RULES, 2005, BARE ACT
UNIVERSAL LAW PUBLISHING.
6. LEGAL ISSUES IN INDIA’S ENERGY SECTOR, ELP, 2019

Research Questions and Hypothesis:

1. What are the legal frameworks behind the Group Captive Arrangements in India and
how it can be improved legally?
2. Why industrial consumers are switching to Group Captive system from government
supplied electricity?
3. How tariff policies are influencing the group captive systems in India?
4. What National Economic Policies (NEP) says about Group Captive system?
5. What are the amendments proposed by the government regarding Group Captive
system to improve its function and to increase the number of these systems?
6. What are the laws of different states of India regarding the group captive system?

Structure of the Paper:

1. Introduction
2. History behind the evolution of Group Captive System
3. Why Group Captive System is required in India
 4. Acts and Rules regarding Group Captive in Electricity Act, 2003 and Electricity
Rules, 2005.
5. States Laws and Rules regarding Group Captive System
6. Tariff Policies of the government regarding Group Captive System
7. Group Captive System helping the Industrial Consumers both big and small scale
industries and businesses.
8. Group Captive System a better way than Government Supplied Electricity
9. Required Amendments in the Electricity Act, 2003 regarding Group Captive System.
10. Major Challenges in Group Captive System
11. Is Group Captive the Next Attractive Solar Market of India?
12. Conclusion

Data Collection Method: The research paper is made by the doctrinal approach. All the
books and the articles mentioned above in the literature review is been used to make this
paper.

References:

1. http://www.idfc.com/pdf/report/Chapter-12.pdf
2. https://mercomindia.com/group-captive-solar-market-2019/
3. https://www.eqmagpro.com/aatmanirbhar-bharat-energy-independence-through-
group-captive-open-access-solar/
4. https://powermin.gov.in/en/content/policy-captive-and-co-generation-plants
5. https://www.business-standard.com/article/economy-policy/new-amendments-to-the-
group-captive-power-scheme-irk-several-states-118081701200_1.html
6. https://blog.ipleaders.in/must-know-captive-generation-plant/
7. https://indiankanoon.org/search/?formInput=%22group%20captive%22
8. https://www.aon.com/captives/global/supporting-the-energy-industry-through-
captive.jsp
9. https://www.fourthpartner.co/group-captive-solar.html
10. https://www.tandfonline.com/doi/abs/10.1080/1540496X.2019.1703107