The Ministry of Power has notified the draft Electricity (Amendment) Rules, 2026 to introduce a revised framework for captive power plants. The amendments primarily revise rule 3 of the Electricity Rules, 2005. Under the draft rules, the definition of ownership for captive generating plants has been expanded to explicitly include subsidiaries, holding companies and other subsidiaries of the same holding company, which will be treated collectively as a single captive user.
The amendments also revise the assessment methodology for captive status. Instead of a rigid full financial year basis, captive qualification will now be assessed with reference to the actual operational period during which the plant functions as a captive generating station. For captive plants set up by an association of persons, including group captive arrangements the revised rules allow individual captive users to draw power based on operational requirements without automatic disqualification due to over- or under-consumption relative to ownership. However, any consumption beyond the proportionate entitlement will not qualify as individual captive consumption, though it may still be considered for collective captive qualification.
The rules further clarify that special purpose vehicles will be treated as an association of persons for captive generation purposes. In addition, states have been empowered to designate nodal agencies for verification of captive status for intra-state captive consumption, while inter-state captive verification will be undertaken by the national load despatch centre under procedures approved by the central government.