SF Prep Notes

Electricity (Amendment) Rules, 2026 notified to clarify captive power framework

The Ministry of Power on 14 March 2026 notified the Electricity (Amendment) Rules, 2026, amending Rule 3 of the Electricity Rules, 2005 on captive generating plants to reduce ambiguity and ease business.

Summary

The Ministry of Power notified the Electricity (Amendment) Rules, 2026 on 14 March 2026, amending Rule 3 of the Electricity Rules, 2005, which deals with captive generating plants. The definition of ownership now includes subsidiaries, holding companies and other subsidiaries of the holding company, and captive status will be verified for the entire financial year. In group captive plants set up by an Association of Persons, a member holding 26% or more ownership will have its entire consumption treated as captive. From 1 April 2026, States and UTs may designate a nodal agency to verify intra-state captive status, while the National Load Despatch Centre will verify inter-state cases. Cross-subsidy surcharge and additional surcharge will not be levied pending verification if users file the prescribed declaration, but become payable with carrying cost if the plant fails to qualify.

Key facts

Notified
14 March 2026, Ministry of Power
Amends
Rule 3, Electricity Rules, 2005 (captive generating plants)
Ownership
Includes subsidiaries, holding company and its other subsidiaries
Verification period
Entire financial year
AoP member with ≥26% ownership
Entire consumption treated as captive
Verifiers (from 1 April 2026)
State/UT nodal agency (intra-state); NLDC (inter-state)
Surcharges
CSS and additional surcharge not levied pending verification, on declaration

Practice MCQs 2 questions

Q1 Advanced

Under the Electricity (Amendment) Rules, 2026, which body will verify captive status in cases of inter-state captive consumption?

Show answer

Correct answer: B — National Load Despatch Centre

From 1 April 2026, inter-state captive status will be verified by the National Load Despatch Centre (NLDC); intra-state cases by a State/UT nodal agency.

Q2 Advanced

Consider the following about the Electricity (Amendment) Rules, 2026: 1. They amend Rule 3 of the Electricity Rules, 2005, which governs captive generating plants. 2. In a group captive plant set up by an Association of Persons, a member holding 26% or more ownership will have its entire consumption treated as captive. Which of the above is/are correct?

Show answer

Correct answer: C — Both 1 and 2

Both statements are correct as per the Ministry of Power's release of 14 March 2026.

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