The Tamil Nadu Electricity Regulatory Commission (TNERC) has unveiled draft regulations aimed at tightening scrutiny on captive generating projects (CGPs) to ensure adherence to stringent ownership and consumption criteria.

Under the proposed framework, distribution licensees would be mandated to conduct annual verifications to confirm compliance with ownership stipulations outlined in the Electricity Rules, 2005. CGPs must maintain a minimum 26% ownership threshold throughout the financial year, while group captive projects necessitate captive users collectively holding at least 26% equity with voting rights.

Moreover, the regulations dictate that captive users must consume a minimum of 51% of the total electricity generated annually, with group captive plants required to align consumption proportionally to their respective ownership shares within a 10% deviation.

To bolster transparency, CGPs and users will be obligated to furnish detailed reports on equity shareholding, generation, and consumption data within four weeks of the financial year's conclusion. Additionally, captive users will be required to submit a bank guarantee as security deposit to cover cross subsidy and additional surcharges.

Failure to meet these stringent criteria will result in forfeiture of captive status for the year, subjecting projects to cross-subsidy and additional surcharges applicable to non-captive entities.

The TNERC has invited stakeholder feedback on the draft regulations until July 15, 2024, before finalizing and implementing the new rules. This follows recent regulatory efforts by TNERC to streamline solar PV integration and establish clearer guidelines for wind and solar generation, underscoring its commitment to enhancing regulatory clarity and operational standards in Tamil Nadu's energy sector.