Captive generating plants must ensure 26% ownership and 51% consumption by captive users, interpreted not only to include individuals but also legal entities as associations, ensuring compliance with stipulated eligibility criteria.

JUDGMENT :

(Sanjiv Khanna, J.)

This judgment interprets relevant provisions of the ELECTRICITY ACT , 2003¹[For short, “Act”] and Rule 3 of the ELECTRICITY RULES , 2005²[For short, “Rules”], for being classified as a Captive Generating Plant³[For short, “CGP”] and a captive user.

2. We will be elucidating the legal position as per the statute, our intent being to first lay down the principles of law and then apply the principles to the facts and circumstances of each case.

3. To decide the legal question, we will refer to two judgments of the Appellate Tribunal for Electricity⁴[For short, “APTEL”]. These are, Kadodara Power Pvt. Ltd. and Others v. Gujarat Electricity Regulatory Commission and Another⁵[2009 SCC OnLine APTEL 119; for short, “Kadodara Power”], dated 22.09.2009, which decision was held to be per incuriam on several findings in Tamil Nadu Power Producers Association v. Tamil Nadu Electricity Regulatory Commission ⁶[2021 SCC OnLine APTEL 19; for short, “Tamil Nadu Power”], dated 07.06.2021. A third decision of the APTEL in Sai Wardha Power Generation Limited and Others v. Maharashtra Electricity Regulatory Commission⁷[2021 SCC OnLine APTEL 78; for short, “Sai Wardha”], dated 26.11.2021, substantially agrees with the view in Tamil Nadu Power⁸[Supra note 6]. We shall refer to the reasons given in the decisions and the explanation and grounds for our conclusion and legal finding.

4. We begin by first reproducing the relevant provisions of the Act⁹[As amended up to 31.08.2023] :

“2. Definition. — In this Act, unless the context otherwise requires,—

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(8) “Captive generating plant” means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any cooperative society or association of persons for generating electricity primarily for use of members of such cooperative society or association;

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(49) “person” shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person;

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9. Captive generation. — (1) Notwithstanding anything contained in this Act, a person may construct, maintain or operate a captive generating plant and dedicated transmission lines:

Provided that the supply of electricity from the captive generating plant through the grid shall be regulated in the same manner as the generating station of a generating company:

Provided further that no licence shall be required under this Act for supply of electricity generated from a captive generating plan to any licensee in accordance with the provisions of this Act and the rules and regulations made thereunder and to any consumer subject to the regulations made under sub-section (2) of Section 42.

(2) Every person, who has constructed a captive generating plant and maintains and operates such plant, shall have the right to open access for the purposes of carrying electricity from his captive generating plant to the destination of his use:

Provided that such open access shall be subject to availability of adequate transmission facility and such availability of transmission facility shall be determined by the Central Transmission Utility or the State Transmission Utility, as the case may be:

Provided further that any dispute