Electricity (Amendment) Rules, 2026.

REGD. No. D. L.-33004/99 The Gazette of India CG-DL-E-14032026-270954 EXTRAORDINARY PART II-Section 3-Sub-section (i) PUBLISHED BY AUTHORITY No. 180] NEW DELHI, FRIDAY, MARCH 13, 2026 MINISTRY OF POWER NOTIFICATION New Delhi, the 13th March, 2026 G.S.R. 186(E).— In exercise of the power conferred by sub-section (1), read with clause (z) of sub-section (2), of section 176 of the Electricity Act, 2003 (36 of 2003), the Central Government hereby makes the following rules, further to amend the Electricity Rules, 2005 namely:- 1. Short title and commencement. — (1) These rules may be called the Electricity (Amendment) Rules, 2026. (2) They shall come into force on the date of their publication in the Official Gazette: Provided that sub-rule (2)(d)(ii), (iii) and sub-rule (4) of Rule 3 shall come into force on the 1st April, 2026. 2. In the Electricity Rules, 2005, for Rule 3, the following rule shall be substituted, namely:- "3. Requirements of Captive Generating Plant.—(1) For the purposes of this rule, unless the context otherwise requires,- (a) "captive user" shall mean an end user of the electricity generated in a Captive Generating Plant, and includes a person or group of persons who consume such electricity either directly or through an Energy Storage System used for storing energy generated from such Captive Generating Plant, and the term "captive use" shall be construed accordingly, Explanation. - Where a captive user is a company, the captive user shall be deemed to include its subsidiary or subsidiaries, its holding company, and any other subsidiary or subsidiaries of such holding company, and shall be collectively treated as a single captive user. (b) "subsidiary company" shall have the meaning assigned to it under clause (87) of section 2 of the Companies Act, 2013 (18 of 2013); (c) "holding company" shall have the meaning assigned to it under clause (46) of section 2 of the Companies Act, 2013 (18 of 2013). (d) "ownership", in relation to a generating station or power plant set up by any person, shall mean proprietary interest and control, or equity share capital carrying voting rights, held either directly or through its subsidiary or subsidiaries, its holding company, and any other subsidiary or subsidiaries of such holding company. (e) "Special Purpose Vehicle" shall mean a legal entity established for the sole purpose of owning, operating and maintaining a generating station, and which does not undertake any other business or activity. Explanation. - For the purposes of these rules, a Special Purpose Vehicle shall be treated as an Association of Persons. (2) (a) No power plant shall qualify as a captive generating plant under section 9 read with clause (8) of section 2 of the Act unless (i) not less than twenty-six per cent of the ownership is held by the captive user (s); and (ii) not less than fifty-one per cent of the aggregate electricity generated in such plant, during the financial year, is consumed for captive use. (b) In case of a generating station owned by a company formed as special purpose vehicle for such generating station, a unit or units of such generating station identified for captive use and not the entire generating station satisfies the conditions contained in sub-clause (i) and (ii) of clause (a) above. Explanation. - For the purpose of this sub-rule: (1) the electricity required to be consumed by the captive users shall be determined with reference to the aggregate generation of the generating unit or units identified for captive use, and not with reference to the generating station as a whole; and (2) the equity shares to be held by the captive user or users in the generating station shall not be less than twenty- six per cent of the proportionate equity of the company corresponding to the generating unit or units identified as the captive generating plant. Illustration. - In a generating station with two units of 50 Mega Watt each namely Units A and B, one unit of 50 Mega Watt namely Unit A may be identified as the Captive Generating Plant. The captive users shall hold not less than thirteen percent of the equity shares in the company (being the twenty six percent proportionate to Unit A of 50 Mega Watt) and not less than fifty one percent of the electricity generated in Unit A determined during the financial year is to be consumed by the captive user(s). (c) In the case of a power plant set up by a registered co-operative society, the conditions specified in sub-clause (i) and (ii) of clause (a) above shall be satisfied collectively by the members of the co-operative society. (d) In the case of a power plant set up by an association of persons, — (i) the conditions specified in sub-clause (i) and sub-clause (ii) of clause (a) above shall be satisfied collectively by all the captive users, and the aggregate consumption by all such captive users from the power plant shall be considered for the purpose of verifying compliance with the said conditions; (ii) captive consumption by an individual captive user shall be admissible only up to one hundred per cent of its proportionate consumption, calculated with reference to its share in the total captive ownership in the power plant; (iii) where any captive user holds not less than twenty-six per cent ownership in the power plant, the condition relating to proportionate consumption specified in sub-clause (ii) of clause (d) shall not apply to such captive user; (iv) where the ownership pattern of the power plant varies during the financial year, the proportionate consumption of each captive user shall be determined on the basis of the weighted average shareholding of such captive user during the financial year; (v) for the purpose of calculating proportionate consumption under sub-rule (2), a captive user, its subsidiary or subsidiaries, its holding company, and any other subsidiary or subsidiaries of such holding company shall be collectively treated as a single captive user. (See illustrations in Schedule-III) (3) It shall be the obligation of the captive user(s) to ensure that the conditions specified in sub-rule (2) are complied with during the financial year, and where the minimum captive consumption requirement is not met during such period, the entire electricity generated by the power plant shall be treated as supply of electricity by a generating company and cross-subsidy surcharge and additional surcharge shall be levied on such consumption: Provided that in the case of a power plant set up by an association of persons, any consumption by an individual captive user in excess of one hundred per cent of its proportionate consumption shall be treated as supply of electricity by a generating company and cross-subsidy surcharge and additional surcharge shall be levied on such excess consumption. (4) (a) The verification of captive status of a power plant where the power plant and the captive user(s) are located in the same State, shall be carried out by the nodal agency designated by the State Government, as per the procedure issued by such nodal agency: Provided that where a captive power plant and its captive user(s) are located in more than one State, the verification shall be carried out by the National Load Despatch Centre (NLDC) in accordance with the procedure issued by the NLDC with approval of the Central Government. (b) An appeal against the verification carried out under clause (a) of sub-rule (4) shall lie before a Grievance Redressal Committee constituted by the Appropriate Government. (c) Pending verification of captive status for any financial year, the cross-subsidy surcharge and additional surcharge shall not be levied, subject to the declaration furnished by the captive user(s) in accordance with the procedure issued by the nodal agency or NLDC, as the case may be: Provided that where the power plant fails verification of captive status for the financial year after furnishing such declaration, the applicable cross-subsidy surcharge and additional surcharge, as determined by the respective State Commission, along with the carrying cost calculated at the base rate of Late Payment Surcharge specified in the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, as amended from time to time, shall be payable. [F. No. 23/26/2022-R&R(Part-1)] PIYUSH SINGH, Addl. Secy. Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 379(E), dated the 8th June, 2005 and was last amended vide GSR 688(E), dated the 19th September, 2025. Schedule- III (see rule 3) Example 1: Plant Qualifies as Captive - Proportionate Consumption Within Limit +----------------------------------------------+----------+----------+----------+--------+ | | Captive User | Total | +==============================================+==========+==========+==========+========+ | | A | B | C | | +----------------------------------------------+----------+----------+----------+--------+ | % Ownership of Captive User(s) (x) | 15 | 10 | 5 | X=30 | +----------------------------------------------+----------+----------+----------+--------+ | Actual Consumption by Captive User(s) | 33 | 28 | 9 | Y=70 | | (as % of total ex-bus generation) (y) | | | | | +----------------------------------------------+----------+----------+----------+--------+ | Captive Consumption Eligibility Limit (as | 35 | 23.33 | 11.67 | | | % of total ex-bus generation) = (Y.x/X) | | | | | +----------------------------------------------+----------+----------+----------+--------+ Note: A) For A, actual consumption (33%) qualifies as captive consumption. B) For B, only consumption up to 23.33% qualifies as captive consumption. C) For C, actual consumption (9%) qualifies as captive consumption. Example 2: Plant Qualifies as Captive – Collective vs Individual Limit +----------------------------------------------+----------+----------+----------+--------+ | | Captive User | Total | +==============================================+==========+==========+==========+========+ | | A | B | C | | +----------------------------------------------+----------+----------+----------+--------+ | % Ownership of Captive User(s) (x) | 15 | 10 | 5 | X=30 | +----------------------------------------------+----------+----------+----------+--------+ | Actual Consumption by Captive User(s) | 20 | 28 | 3 | Y=51 | | (as % of total ex-bus generation) (y) | | | | | +----------------------------------------------+----------+----------+----------+--------+ | Captive Consumption Eligibility Limit (as | 25.5 | 17 | 8.5 | | | % of total ex-bus generation) = (Y.x/X) | | | | | +----------------------------------------------+----------+----------+----------+--------+ Note: A) For A, Actual consumption (20%) qualifies as captive consumption. B) For B, only consumption up to 17% qualifies as captive consumption. However, entire consumption (28%) counts for plant verification. C) For C, actual consumption (3%) qualifies as captive consumption. Example 3: Plant Qualifies as Captive – Individual Ownership ≥ 26% +----------------------------------------------+----------+----------+----------+--------+ | | Captive User | Total | +==============================================+==========+==========+==========+========+ | | A | B | C | | +----------------------------------------------+----------+----------+----------+--------+ | % Ownership of Captive User(s) (x) | 30 | 15 | 5 | X=50 | +----------------------------------------------+----------+----------+----------+--------+ | Actual Consumption by Captive User(s) | 80 | 12 | 5 | Y=97 | | (as % of total ex-bus generation) (y) | | | | | +----------------------------------------------+----------+----------+----------+--------+ | Captive Consumption Eligibility Limit | 58.2 | 29.1 | 9.7 | | | (as % of total ex-bus generation) = (Y.x/X) | | | | | +----------------------------------------------+----------+----------+----------+--------+ Note: A) For A, although proportionate limit is 58.2%, actual consumption (80%) qualifies because ownership is ≥26%. B) For B, actual consumption (12%) qualifies as captive consumption. C) For C, actual consumption (5%) qualifies as captive consumption. Example 4: Plant Qualifies as Captive - Group Entities Treated as Single Person +----------------------------------------------+-------------+----------+----------+--------+ | | Captive User | Total | +==============================================+=============+==========+==========+========+ | | Group | B | C | | +----------------------------------------------+-------------+----------+----------+--------+ | % Ownership of Captive User(s) (x) | 22 | 4 | 6 | X=32 | | | (A=22; | | | | | | A1 =0; | | | | | | A2 = 0; | | | | | | A3 = 0) | | | | +----------------------------------------------+-------------+----------+----------+--------+ | Actual Consumption by Captive User(s) | 60 | 6 | 4 | Y=70 | | (as % of total ex-bus generation) (y) | (A=0; | | | | | | A1 =30; | | | | | | A2 = 5; | | | | | | A3 = 25) | | | | +----------------------------------------------+-------------+----------+----------+--------+ | Captive Consumption Eligibility Limit | 48.12 | 8.75 | 13.12 | | | (as % of total ex-bus generation) = (Y.x/X) | | | | | +----------------------------------------------+-------------+----------+----------+--------+ Note: A) Imagine a group where A holds ownership, A1 is the holding company of A, A2 the subsidiary of A and A3 the subsidiary of Al. In this case, only collective consumption of group (48.12%) qualifies. Excess does not qualify as captive consumption. Allocation of the eligible collective captive consumption among group entities shall be determined by the group, subject to the collective eligibility limit. B) For B, actual consumption (6%) qualifies as captive consumption. C) For C, actual consumption (4%) qualifies as captive consumption.