No Reopening of Settled Claims: PSERC Rejects a Fresh LPS Claim After the Appellate Tribunal’s Judgment Order dated 13 October 2026 | Petition No. 47 of 2026

The Punjab State Electricity Regulatory Commission (“PSERC”), vide its order dated 13 October 2026 in M/s Indian Sucrose Limited v. Punjab State Power Corporation Limited & Anr., dismissed a claim for Late Payment Surcharge (“LPS”).

Brief Facts

Indian Sucrose Limited had challenged the recovery of charges towards a 66 kV line and bay by PSPCL. The Appellate Tribunal, vide judgment dated 14 November 2024, directed PSPCL to charge only the depreciated book value of the line and bay and refund the excess amount. The Hon’ble Supreme Court dismissed PSPCL’s appeal against the judgment dated 14 November 2024.

Indian Sucrose thereafter approached PSERC under Section 86(1)(f) of the Electricity Act, 2003, seeking LPS at 15% per annum under the Short-Term Power Purchase Agreement , along with interest and carrying cost.

Findings of the Commission

PSERC held that Indian Sucrose had already sought interest on the excess recovery in the earlier proceedings before Appellate Tribunal. However, the Appellate Tribunal had directed only a refund of the excess amount and had not granted the additional monetary relief sought.

The Commission rejected the contention that the subsequent claim constituted an independent contractual claim for LPS. It observed that the claim arose from the same energy bills and recovery that had formed the subject matter of the earlier proceedings. A party could not reopen or enlarge the relief finally adjudicated by assigning a different nomenclature to the subsequent claim.

PSERC further held that its jurisdiction under Section 86(1)(f) could not be exercised to reopen, modify or supplement a final judgment of Appellate Tribunal. Consequently, the claims for LPS and interest were rejected and the petition was dismissed as not maintainable.

Key Takeaway

The order reiterates the importance of finality. Parties must carefully formulate all monetary reliefs in the original proceedings, as a subsequent claim under a contractual provision may not be maintainable where it seeks additional relief arising from the same transaction already finally adjudicated.

APTEL Verdict: Under-utilisation of Transmission Assets No Bar to Commercial Operation or Recovery of Charges through the PoC Mechanism

The Hon’ble Appellate Tribunal for Electricity has upheld POWERGRID’s contention that a transmission asset placed in regular service achieves commercial operation irrespective of the extent of its utilisation, and upon commercial operation, its charges are recoverable through the Point of Connection (‘PoC’) mechanism. The Tribunal thereby rejected the challenge of Tamil Nadu Generation and Distribution Corporation Ltd. (‘TANGEDCO’) to the commercial operation and PoC recovery of the Tuticorin–Salem transmission corridor planned for the generation projects of Coastal Energen Private Limited (Coastal Energen) and Ind-Barath Power (Madras) Limited (Ind-Barath).

The Hon’ble Appellate Tribunal for Electricity, in its judgment dated 13 October 2026 in Tamil Nadu Generation and Distribution Corporation Ltd. v. Central Electricity Regulatory Commission & Ors. (Appeal Nos. 56 and 329 of 2018), has delivered a significant ruling upholding the position consistently taken by Power Grid Corporation of India Ltd. (POWERGRID) before the Central Commission and the Hon’ble Appellate Tribunal.

TANGEDCO had challenged the Central Commission’s orders dated 19.09.2017 in Petition No. 235/TT/2016 and 21.11.2017 in Petition No. 71/TT/2017, which approved the date of commercial operation (COD) of the assets as 13.11.2016 and 23.10.2016 respectively and directed recovery of their charges through the PoC mechanism. TANGEDCO contended that the system was planned for 2,000 MW of Long-Term Access (LTA), of which only 558 MW was tied up through its Power Purchase Agreement (PPA) with Coastal Energen. It argued that the assets were therefore never put to “beneficial use”, and that charges for the unutilised 1,442 MW ought to be borne by the generators rather than the Designated Inter-State Transmission System Customers (DICs).

POWERGRID’s Contentions Before the Tribunal

Throughout the proceedings, POWERGRID consistently advanced the following positions:

1. The Assets Achieved COD upon being placed in Regular Service

• POWERGRID argued that the assets were completed in accordance with the CERC (Terms and Conditions of Tariff) Regulations, 2014. TANGEDCO’s own admitted drawal of 558 MW from Coastal Energen through the system established actual use from commissioning.
• It was submitted that the Regional Load Despatch Centre (RLDC) charging certificate and Central Electricity Authority (CEA) clearance merely corroborated regular service. The non-commissioning of Ind-Barath and right-of-way delays fell within proviso (ii) to Regulation 4(3), being reasons not attributable to the transmission licensee.

2. The Scheme was Implemented under a Final Regulatory Approval

• POWERGRID highlighted that the corridor was implemented under the Central Commission’s regulatory approval dated 31.05.2010 in Petition No. 233 of 2009, as permitted by Clause 22.7(iv) of the Detailed Procedure, 2009.
• TANGEDCO participated in those proceedings and never challenged that order. Its challenge to the necessity of the corridor was therefore an impermissible and belated collateral attack.
• Both generators had executed Bulk Power Transmission Agreements and furnished bank guarantees. Ind-Barath first disclosed abandonment only at the 15th Joint Coordination Committee (JCC) meeting on 10.06.2016, when the assets were already at an advanced stage.
• The 765 kV corridor, initially charged at 400 kV, was planned for about 6,500 MW of concentrated coastal generation in the Tuticorin area, so as to conserve right of way.

3. The Assets form part of the Meshed Inter-State Transmission Network and are Recoverable through PoC

• POWERGRID submitted that the assets form part of a common meshed network serving multiple users, not a system dedicated to the two generators.
• PoC recovery was therefore consistent with Regulation 43 of the 2014 Tariff Regulations read with the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010.
• The liability of Generator for relinquished LTA is addressed through relinquishment charges determined in Petition No. 92/MP/2015. Having implemented the assets after regulatory approval and incurred substantial expenditure and debt, POWERGRID could not be denied its legitimate transmission charges.

Hon’ble Tribunal’s Findings

The Hon’ble Tribunal upheld POWERGRID’s contentions and the Central Commission’s orders, holding that:

i) Regulation 4(3) of the 2014 Tariff Regulations requires the asset to be in regular service. “Regular use” must be distinguished from the “full use” on which TANGEDCO insisted.

ii) Transmission lines are lumpy assets planned over a long horizon and cannot be augmented in small increments. The N-1 reliability criterion itself requires lines to operate below their thermal capacity.

iii) Once an asset is completed, commissioned and capable of performing its intended function, the absence of full utilisation cannot postpone its COD. PSPCL v. PGCIL (Appeal No. 123 of 2011) was held inapplicable.

iv) The regulatory remedy for stranded capacity is relinquishment compensation under Regulation 18 of the 2009 Connectivity Regulations. Under Regulation 18(3), that compensation reduces the charges payable by other long-term and medium-term customers.

v) Clause 22.7(iv) of the Detailed Procedure permitted the scheme with the Central Commission’s approval, granted on 31.05.2010. By the time Ind-Barath disclosed abandonment, execution had progressed too far to be altered.

vi) The entire 2 x 660 MW of Coastal Energen, Kudankulam Nuclear Power Project (2 x 1,000 MW) and Tuticorin JV (2 x 500 MW) are pooled at Tuticorin Pooling Station.

vii) Likening planning agencies to an architect and the transmission licensee to a contractor, the Tribunal held that fixed-cost recovery turns on whether capacity is created, commissioned, maintained and kept available, not on power flow at a given time.

viii) The non-materialisation of planning assumptions was not attributable to POWERGRID, which implemented the approved scheme. Charges are recoverable under the 2010 Sharing Regulations, subject to prudence check of capital cost.

ix) Brevity of reasoning was no ground to set them aside, as the Tribunal decided the substantive challenge on merits. Both appeals were dismissed.

This judgment marks a significant affirmation of POWERGRID’s consistent stand before the Central Electricity Regulatory Commission and the Hon’ble Appellate Tribunal.

The ruling provides regulatory certainty to transmission licensees. Once a scheme approved by the competent authorities is implemented, commissioned and kept available, recovery of admissible tariff cannot be made hostage to the fortunes of the generators for whom it was planned.

It recognises the anticipatory and lumpy nature of transmission planning, while the relinquishment mechanism under the Connectivity Regulations shields other DICs from the cost of stranded capacity. This decision is a significant victory for POWERGRID and reinforces the stability of the PoC framework on which inter-State transmission investment depends.

APTEL Clarifies but Does Not Reopen, The Arbitrability Question Under Section 79(1)(f): Review Petition No. 6 of 2026

Tata Power Company Limited v. Gujarat Urja Vikas Nigam Limited & Ors., Review Petition No. 6 of 2026 decided on 17 September 2026 

The Dispute

Tata Power sought review of Appellate Tribunal’s common judgment dated 25 February 2026 in Appeal Nos. 348 of 2025 & Batch. Tata Power contended that the judgment under review had described paragraph 36 of the Appellate Tribunal’s earlier judgment dated 28 August 2024 in Appeal No. 309 of 2019 (the DVC judgment) as a “stray sentence” and that conclusion of the judgment under review that only disputes falling within clauses (a) to (d) of Section 79(1) can be adjudicated by the Central Commission or referred to arbitration under Section 79(1)(f) was directly contrary to the DVC judgment of a coordinate bench, which the Judgement under Review could not dilute.

Paragraph 36 of the DVC judgment had recorded that non-tariff disputes involving a generating company or a distribution licensee do not fall within clause (f) of Section 79(1) and are thus arbitrable. The challenge to DVC judgment was dismissed by the Hon’ble Supreme Court in Civil Appeal No. 10480 of 2024.

The Law on Review

The Appellate Tribunal restated the settled position under Section 114 and Order XLVII Rule 1 CPC: an error apparent on the face of the record is one that is self-evident and not one established by a long-drawn process of reasoning, review corrects a patent mistake but does not substitute a view and a review petition cannot become an appeal in disguise.

Findings on the Substantive Ground

The Appellate Tribunal declined to disturb the reasoning of the judgment under review. The Appellate Tribunal held that since the Central Commission can adjudicate only disputes falling under clauses (a) to (d) of Section 79(1), its referral power is confined to the same category. The identically worded second limb of Section 86(1)(f) was read in the same manner, the Appellate Tribunal noting that a contrary construction would create concurrent referral jurisdiction between the Central and State Commissions and would permit a State Commission to refer disputes falling wholly outside its State.

On Renew Wind Energy (AP2) (P) Ltd. v. Solar Energy Corporation of India, 2025 SCC OnLine Del 8252, the Appellate Tribunal held that the Hon’ble High Court’s attention had not been drawn to Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd., (2019) 17 SCC 82 and that the Appellate Tribunal was bound to follow the Hon’ble Supreme Court.

The Appellate Tribunal held that the judgment under review does not contradict the DVC judgment but is clarificatory of it, explaining its actual purport and observed that the clarification “ought to have been given in the DVC judgment itself”.

The Appellate Tribunal recorded its disapproval at paragraph 36 of the DVC judgment being characterised as a “stray sentence”, holding that the paragraph contained the final view of the Appellate Tribunal on arbitrability and that without it the DVC judgment would be inchoate. That characterisation was held to be an error apparent on the face of the record and those observations alone were set aside. The review petition was thereafter dismissed.

An Unchallenged Regulatory Order Bars a Fresh Petition on the Same Tariff — Appeal No. 325 of 2026

Haryana Power Purchase Centre v. M/s Siwana Solar Power Projects Ltd. & Haryana Electricity Regulatory Commission decided on 18 September 2026 

Background

HPPC and Siwana executed a PPA in 2014 for a 5 MW solar plant. Clause 4.1 fixed the applicable tariff as the lowest of three options: the HERC (State Commission) generic tariff, the lowest tariff accepted in HPPC’s first long-term competitive bidding tender, or the lowest tariff in HAREDA’s first reverse-bidding tender. A tariff of Rs. 6.44/kWh was discovered. HERC, by order dated 20.01.2026, held Siwana bound by the PPA and directed year-to-year tariff corresponding to a levelized Rs. 6.44/kWh. That order was upheld by Appellate Tribunal for Electricity on 27.05.2019 in Appeal No. 150 of 2016.

Separately, PPAs with four other developers under the same tender were initially rejected by HERC and Appellate Tribunal by judgment dated 09.03.2018 in Appeal Nos. 278 and 307 of 2016 directed their approval at Rs. 5.68/kWh. The Hon’ble Supreme Court dismissed the developers’ appeals on 10.10.2023. HPPC thereafter paid Siwana at Rs. 5.68/kWh  and HERC by order dated 10.05.2019 permitted that rate as an interim arrangement.

Siwana’s Petition No. 26 of 2024, seeking implementation of Rs. 6.44/kWh was dismissed in limine by HERC on 12.11.2024 on the principles of res judicata. No appeal was filed against that order. Siwana then filed Petition No. 78 of 2025 and HERC by the impugned order dated 14.05.2026 granted Rs. 6.44/kWh from 1 April 2019, with differential tariff, interest at 9.15% per annum and late payment surcharge.

Findings

On res judicata. HERC’s order dated 12.11.2024 had held that the sum and substance of all of Siwana’s petitions was the grant of Rs. 6.44/kWh, that the issue had attained finality and that res judicata applied. That order went unchallenged. Comparing the prayers in Petition No. 26 of 2024 and Petition No. 78 of 2025, the Appellate Tribunal found them identical, the parties the same and the subject-matter the same. Applying Section 11 CPC and Syed Mohd. Salie Labbai v. Mohd. Hanifa, (1976) 4 SCC 780, Satyadhyan Ghosal v. Deorajin Debi, 1960 SCC OnLine SC 15, Sulochana Amma v. Narayanan Nair, (1994) 2 SCC 14, Swamy Atmananda v. Sri Ramakrishna Tapovanam, (2005) 10 SCC 51, Bhanu Kumar Jain v. Archana Kumar, (2005) 1 SCC 787 and M. Nagabhushana v. State of Karnataka, (2011) 3 SCC 408, the Appellate Tribunal held that the doctrine operates even where the earlier decision may be erroneous, the remedy lying in appeal or review and not in fresh litigation.

The “past dues versus prospective tariff” distinction drawn by HERC in the impugned order was held to be legally unsustainable. The impugned order was set aside.

Karnataka High Court upholds validity of Regulation 5.8(vii)(a) of the GNA Regulations, 2022, sets aside Single Judge’s directions permitting CTUIL to process Renewable Power Park Developer’s (RPPD) applications without prior government authorisation

In a common judgment dated 28.08.2026 in Writ Appeal (“W.A.”) No. 1961 of 2025 and seven connected appeals, the Division Bench of the Karnataka High Court has upheld the constitutional validity of Regulation 5.8(vii)(a) of the Central Electricity Regulatory Commission (Connectivity and General Network Access to the Inter-State Transmission System) Regulations, 2022 (“GNA Regulations”), rejecting the challenge raised by M/s Rays Power Infra Limited (“RPIL”) that the provision offends Article 14 of the Constitution of India.

By allowing the appeals filed by Central Transmission Utility of India Limited (“CTUIL”), the Division Bench of the Karnataka High Court has set aside the common order dated 09.09.2025 passed by the Learned Single Judge to the extent it directed CTUIL to restore and reconsider RPIL’s connectivity applications and to reserve transmission capacity in RPIL’s favour at the Tumkur-II and Bellary sub-stations, notwithstanding the absence of the government authorisation mandated under Regulation 5.8(vii)(a).

Brief Background

The concept of a Power Park Developer authorised to seek connectivity to the Inter-State Transmission System (“ISTS”) on behalf of multiple generating stations was introduced by the Fifth Amendment to the Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations, 2009, notified on 15.05.2015, confined initially to a Solar Power Park Developer authorised by the Central Government. By the Seventh Amendment notified on 09.01.2019, the expression was widened to ‘Renewable Power Park Developer’ (“RPPD”) and the power to grant authorisation was extended to the State Governments as well. The GNA Regulations, which replaced the 2009 Regulations with effect from 07.06.2022, retained the requirement of governmental authorisation, presently contained in Regulation 5.8(vii)(a), as amended in 2023 and 2024.

RPIL, claiming to be an RPPD, proposed to establish renewable energy parks in Karnataka with connectivity to the ISTS at the Tumkur-II and Bellary pooling sub-stations. When the State Government and Karnataka Renewable Energy Development Limited (“KREDL”) did not act on its request for authorisation, RPIL instituted W.P. No. 21533/2024 and thereafter applied to CTUIL for connectivity without furnishing the authorisation. Treating the absence of authorisation as a “major deficiency” under the amended Regulation 3.5 of the GNA Regulations, CTUIL closed the applications by orders dated 30.08.2024, 02.09.2024 and 09.09.2024. RPIL and its SPVs also instituted Writ Petition (“W.P.”) No. 35002/2024 seeking a time-bound direction to the State Government to grant the authorisation, in the course of which interim orders were passed reserving 890 MW at Tumkur-II and 600 MW at Bellary for the petitioners.

By the common order dated 09.09.2025, the Learned Single Judge partly allowed the writ petitions. Relying on Reliance Energy Limited v. Maharashtra State Road Development Corporation Ltd., (2007) 8 SCC 1, the Learned Single Judge held that RPIL had been denied a level playing field since the GNA Regulations prescribed no timeline for grant of authorisation, extended the interim reservation of capacity and consequently set aside CTUIL’s orders dated 30.08.2024, 02.09.2024, 09.09.2024 and directed CERC and CTUIL to reconsider RPIL’s applications and grant in-principle approval, subject to RPIL eventually obtaining the authorisation. The Learned Single Judge, however, did not specifically strike down or read down Regulation 5.8(vii)(a).

Aggrieved by this common order, CTUIL preferred Writ Appeal contending that the Single Judge could not have issued directions inconsistent with a Regulation whose validity had been left undisturbed.

1. RPPD and Renewable Generators are not similarly placed, no violation of Article 14

Examining the challenge on the touchstone of the settled principles governing judicial review of subordinate legislation, as laid down in Indian Express Newspapers (Bombay) Private Limited v. Union of India, (1985) 1 SCC 641, State of A.P. v. McDowell and Company, (1996) 3 SCC 709, and Shayara Bano v. Union of India, AIR 2017 SC 4609, the Appellate Court held that subordinate legislation can be invalidated only where it is ultra vires the parent statute, unconstitutional, in excess of the delegated power, or manifestly arbitrary, and that a regulation cannot be struck down merely because the Court considers it unwise or capable of improvement.

Applying this test, the Division Bench held that the distinction drawn between an RPPD and a renewable energy developer is “neither artificial nor illusory”, since an RPPD develops common infrastructure, acquires land, and provides pooling arrangements to facilitate several generating stations within an integrated park, thereby occupying a distinct position in the regulatory framework. The Division Bench held that the requirement of prior government authorisation ensures that only projects recognised by the Appropriate Government are treated as renewable power parks for the purpose of seeking connectivity on behalf of multiple generating stations, a classification resting on an intelligible differentia bearing a rational nexus with the object of orderly development of the transmission network and avoidance of speculative blocking of transmission capacity. The continuity of requirement since 2015, through successive amendments was also held to demonstrate that it forms part of a considered legislative policy rather than an arbitrary stipulation.

2. Learned Single Judge could not direct CTUIL to act contrary to a Regulation whose validity was left undisturbed

The Division Bench held that once Regulation 5.8(vii)(a) was found to be constitutionally valid, its implementation necessarily followed and CTUIL, being the statutory/nodalimplementing authority under Section 38 of the Electricity Act, 2003, with no independent power to waive, relax or ignore a mandatory regulatory requirement could not have been directed to restore and process RPIL’s applications in the absence of the authorisation. The Division Bench observed that although the Single Judge had “consciously declined to strike down or read down” the Regulation, the consequential directions issued nevertheless had the effect of compelling CTUIL to act contrary to it and that such directions, “though equitable in appearance, have the effect of rendering statutory requirements otiose”.

The Division Bench also rejected the contention that CERC ought to have exercised its powers of relaxation and removal of difficulty under Regulations 41 and 42 of the GNA Regulations in RPIL’s favour, noting that RPIL’s representation seeking relaxation had in fact been considered and rejected by CERC by order dated 11.04.2025, and that such enabling powers, vested in the regulator, cannot be exercised by a Court in substitution of the Regulator.

The judgment reaffirms that the requirement of prior government authorisation for a RPPD under Regulation 5.8(vii)(a) of the GNA Regulations rests on a valid and rational classification distinguishing such developers from ordinary renewable energy generators and that courts exercising judicial review cannot, without disturbing the validity of a subordinate regulation, issue directions that have the practical effect of dispensing with its mandatory requirements, while nevertheless flagging the need for the appropriate government to put in place a transparent and time-bound procedure for grant of such authorisation.

PSERC Holds Pre-Existing PPAs Without a Change in Law Clause Bind the Parties, Dismisses Solar Generators’ Claim for Pass-Through of RCM-GST on Land Lease Rentals

By a common order dated 19.08.2026, the Punjab State Electricity Regulatory Commission (“State Commission”) has dismissed the Petitions filed by Vector Green Sunshine Pvt. Ltd. (“VGSPL”) and Anr. against Punjab State Power Corporation Limited (“PSPCL”) and Punjab Energy Development Agency (“PEDA”), holding that the Petitioners’ claim for additional payments or tariff adjustment on account of change in law events, is contrary to the agreed terms of the PPAs and is accordingly not maintainable.

By way of Petition Nos. 22 of 2026 and 23 of 2026, the Petitioners had sought, inter alia, a direction to PSPCL to pass through the additional expenditure incurred on account of GST payable under RCM on rent paid for land taken on lease from unregistered lessors, along with carrying cost/interest either under Regulation 23 of the CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012 (“RE Tariff Regulations”), or as a Change in Law under the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021 (“CIL Rules”) or in the alternative, through exercise of the State Commission’s general regulatory powers.

Brief Background

The Petitioner was awarded Solar PV Power Projects by PEDA pursuant to a Request for Proposal (“RfP”) issued under the Government of Punjab’s NRSE Policy 2012 with the final tariff arrived at after adjustment of the discount offered by the Petitioners on the generic levelised tariffs determined by the State Commission under the RE Tariff Regulations.

Vide Notification dated 08.10.2024, MoF brought “service by way of renting any property other than residential dwelling” within the RCM. Consequent thereto, the Petitioners, having taken project land on lease from unregistered lessors, became liable to discharge GST at 18% under RCM on the lease rentals. The Petitioners issued Change in Law notices to PSPCL on 29.04.2025, which PSPCL disputed on the ground that the PPAs contained no Change in Law provision and that leasing, rather than purchasing, land was a commercial decision of the Petitioners.

1. Absence of a Change in Law clause in the PPAs

The Petitioners contended that since the PPAs contained no provision restricting or barring a Change in Law claim, they were entitled to relief. PSPCL’s case, on the other hand, was that the express tariff clause together with the absence of a Change in Law clause reflected the parties’ clear intention to freeze the tariff and allocate the risk of future statutory fiscal changes to the Petitioners.

Examining Article 2.1.1(ii) of the PPAs, which provides that “the tariff shall remain constant throughout the Tariff Period following the year of commissioning” and that “no additional payment shall on any account be payable by PSPCL” read with Article 29.1.0 (Entire Agreement) and Article 31.0.0 (No Party Deemed Drafter), the State Commission held that the PPAs stipulate that no additional payment is payable by PSPCL on any account. The State Commission accordingly held the Petitioners’ plea that the PPAs contain no restricting provision to be “misconceived and unsustainable” also noting that the model PPA containing this tariff provision formed part of the bidding documents.

2. Applicability of the CIL Rules, 2021 to pre-existing PPAs

The Petitioners argued that, in the absence of a Change in Law provision in the PPAs, the CIL Rules 2021, being statutory and having overriding effect would independently apply to the Notification dated 08.10.2024.

Relying on the Supreme Court’s judgment in Gujarat Urja Vikas Nigam Limited v. Renew WindEnergy (Rajkot) Private Limited (2023), which holds that where PPAs are “entered into in the exercise of equal bargaining power…within the framework of existing regulations…unless any later amendment expressly overrides existing contracts, the terms of such agreements bind the parties,” and as further explained by APTEL in M/s Rosa Power Supply Co. Ltd. v. UPPCL & UPERC (2025), the State Commission held that in the absence of any express provision in the CIL Rules stating that they would override existing PPAs, and given the specific stipulation in the present PPAs that no additional payment is payable by PSPCL, “the CIL Rules 2021 do not override the provisions of the PPAs in the present case and the existing PPAs shall remain fully applicable and binding upon the parties.”

3. Regulation 23 of the RE Tariff Regulations, 2012

The Petitioners contended that the pass-through of RCM-GST was allowable under Regulation 23 of the RE Tariff Regulations, which excludes taxes and duties from the tariff. PSPCL’s response was that Regulation 3 of the RE Tariff Regulations confines their application to tariffs determined under Section 62, whereas the Petitioners’ tariff was discovered by way of a discount offered on the generic tariff pursuant to a bidding process conducted by PEDA.

Referring to its own Suo-Motu Order dated 19.07.2012 in Petition No. 35 of 2012, the State Commission held that bidding on the basis of a discount to the generic ceiling tariff, as directed by the State Commission itself, squarely amounts to determination of tariff under Section 63, rejecting the Petitioners’ plea to the contrary. The State Commission further held, relying on the Statement of Objects and Reasons to the RE Tariff Regulations, that Regulation 23 does not extend to taxes such as excise duty, sales tax and other levies that already form part of the normative capital cost, of which land is an enumerated component and observed that since the Petitioners had themselves justified leasing land as being more economical and instrumental to bidding a lower tariff, permitting a subsequent claim for the consequential GST liability “would tantamount to vitiating the entire competitive process” to the detriment of other bidders who structured their bids differently.

4. Exercise of the State Commission’s general regulatory power

As an alternate prayer, the Petitioners sought exercise of the State Commission’s general regulatory power under Section 86 of the Electricity Act, 2003 read with Regulations 69 and 71 of the PSERC (Conduct of Business) Regulations, 2005, contending that the absence of any provision addressing a post-bid Change in Law event made this a fit case for such intervention.

The Sztate Commission held that Section 86(1)(e) of the Electricity Act does not envisage grant of enhanced tariff and that the “difficulty” contemplated under the power to remove difficulty is one arising in giving effect to the Regulations and not one arising from application of the Regulations, as held by APTEL in Ratnagiri Gas and Power Private Ltd. Distinguishing the Supreme Court’s ruling in PGCIL v. Madhya Pradesh Power Transmission Company Ltd. & Ors.(2025) as applicable only to a situation involving an “unprecedented event not covered by any guidelines, regulations or contractual provisions”, the State Commission held that the present case, by contrast, concerned PPAs that explicitly and unequivocally provided that no additional payment would be payable by PSPCL. Relying on the Supreme Court’s decision in Gujarat Urja Vikas Nigam Limited v. Solar Semiconductor Power Company (India) Private Limited and Others (2017), the State Commission held that its regulatory powers “cannot travel beyond its own procedure so as to alter the terms and conditions of the PPA” and cannot be invoked “to substantially alter the terms of the contract between the parties so as to prejudice the interest of the consumers ultimately.”

The State Commission accordingly dismissed the Petitioners’ claim seeking additional payments or tariff adjustment on account of the Central Notification dated 08.10.2024 as being contrary to the agreed terms of the PPAs.

APTEL Sets Aside APERC’s Deduction of Variable Charges for Monthly Availability Shortfall: Energy Charges Cannot Be Penalised

The Appellate Tribunal for Electricity (“Appellate Tribunal”) in its judgment dated 03.07.2026, has ruled in favour of Hinduja National Power Corporation Limited (“HNPCL”), setting aside the order dated 30.12.2025 passed by the Andhra Pradesh Electricity Regulatory Commission (“APERC”), to the extent it directed deductions from HNPCL’s variable charges on account of shortfall in monthly plant availability.

By allowing Appeal No. 27 of 2026, the Appellate Tribunal has held that under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024, the APERC Regulations of 2008, and the Power Purchase Agreement (“PPA”) dated 16.07.2024 executed between the parties, only fixed/capacity charges are linked to plant availability, while energy charges are strictly linked to the scheduled energy actually supplied and cannot be reduced or penalised for a shortfall in monthly availability.

1. No Statutory or Contractual Basis for Deducting Variable Charges

APERC by way of the Impugned Order had directed the DISCOMs to apply graded deductions from the Variable Cost – 5paise per unit where the shortfall in actual monthly availability was up to 5% below the normative/target level, 10paise where the shortfall was between 5% and 15%, and 15paise where the shortfall exceeded 15%, with liberty to HNPCL to seek release of the withheld amounts by establishing that the underperformance was attributable to uncontrollable factors.

HNPCL contended that neither the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024 (adopted by APERC), nor the APERC Regulations, 2008, nor the PPA provide for any reduction in energy charges on account of a shortfall in availability, and that the deductions were consequently without statutory or contractual authority. HNCPL contended that Rs. 12.26 Crore had already been withheld from HNPCL’s bills for the months of December 2025 to February 2026.

2. Fixed Charges, Not Energy Charges, are Linked to Availability

Examining Regulation 15 and 16 read with Chapter 11 of the CERC Regulations, 2024, Clause 1.2.2 and 1.2.3 of Schedule-F of the PPA, and Regulations 11 to 13 of the APERC Regulations, 2008, the Appellate Tribunal held that the governing framework, whether under the CERC Regulations, the APERC Regulations, or the PPA executed between the parties expressly and unambiguously stipulates that monthly fixed charges are linked to the Plant Availability Factor for the month vis-à-vis the normative annual plant availability, whereas energy charges are linked solely to the fuel cost/energy charge rate applied to the quantum of energy actually supplied during the month, irrespective of the plant availability achieved in that month.

The Appellate Tribunal held that once the Regulations stipulate the manner of recovery of fixed cost and computation of energy charge, APERC has no jurisdiction to interfere with or modify that scheme by way of adjudication or in a tariff order, any departure can only be effected by way of a formal amendment to the Regulations, and not otherwise.

3. APERC cannot invoke Casus Omissus to fill a regulatory gap that does not exist

APERCS had contended that while the PPA and Regulations focus on annual normative availability, they do not preclude monthly adjustments, and that APERC, as a statutory body, is empowered and obligated to fill contractual and regulatory gaps to ensure reliable supply.

The Appellate Tribunal rejected this submission, holding that both the CERC and APERC Regulations clearly stipulate the methodology for recovery of energy charges for a given month, and once such methodology is prescribed, the Commission is bound to apply it in its entirety. The doctrine of casus omissus was held to have no application, since the Regulations are complete in themselves and leave no vacuum for the Commission to legislate by way of adjudication.

4. Parity with other generators cannot justify an unlawful deduction

APERC had sought to justify the deductions by referring to similar reductions applied to other Intra-State generators such as APGENCO. The Appellate Tribunal held that the application of a similar reduction to other generators is of no relevance, since those orders were not under challenge and the Appellate Tribunal was not bound to extend the same treatment to HNPCL merely because it had been applied elsewhere. The doctrine of “negative equality” or parity cannot be invoked to perpetuate an illegality or justify a deviation from the Regulations, and each appeal must be adjudicated on the basis of the statutory framework and the specific impugned order under consideration.

Accordingly, the Appellate Tribunal set aside the Impugned Order on this issue and directed that recovery of energy charges be enforced strictly in accordance with the applicable CERC Regulations and the PPA, with the Respondents directed to refund the amount deducted/withheld from HNPCL’s energy bills along with applicable carrying cost within four weeks from the date of the judgment.

5. Part load compensation, remanded for quantification only

HNPCL had also claimed Part Load Compensation (“PLC”) in terms of Clause 1.2.5 of Schedule-F of the PPA read with Regulation 6.3B of the CERC [Indian Electricity Grid Code(IEGC)] (Fourth Amendment) Regulations, 2016, on which the Impugned Order contained no discussion, analysis or finding, despite APERC having recorded HNPCL’s claim. The DISCOMs admitted that the Revised Consolidated PPA explicitly provides for part load compensation, but contended that no separate determination was required as PLC for the previous Control Period had been claimed as part of the True-Up process on an actual basis.

Finding no dispute with regard to HNPCL’s entitlement to Part Load Compensation, and noting that the controversy, if any, was confined only to quantification and reconciliation, the Appellate Tribunal held that HNPCL is entitled to Part Load Compensation in terms of the PPA and Regulation 6.3B of the IEGC (Fourth Amendment), 2016, and remanded the matter to APERC for determination and finalisation of the amount payable towards PLC.

The judgment reaffirms that in a statutory tariff regime, the mechanism prescribed under the Regulations and the PPA for recovery of fixed and energy charges must be followed strictly. It further clarifies that the doctrine of casus omissus cannot be invoked to fill a gap where none exists, and that parity with the treatment accorded to unrelated generators cannot be used to sustain an otherwise unlawful deduction.

Judgement Link:

APTEL Upholds that Delay in Securing Long-Term Access (LTA) is not a valid Force Majeure and Therefore, Scheduled Delivery Date under PPA Cannot be Unilaterally Extended

In a judgment dated 03.07.2026 in Appeal No.183 of 2020, the Appellate Tribunal for Electricity (Appellate Tribunal) has dismissed the appeal filed by Maruti Clean Coal and Power Limited (MCCPL), thereby upholding the Order dated 27.11.2019 passed by the Central Electricity Regulatory Commission (Central Commission). The Appellate Tribunal has ruled in favour of the Rajasthan Discoms — Jaipur Vidyut Vitran Nigam Limited, Ajmer Vidyut Vitran Nigam Limited and Jodhpur Vidyut Vitran Nigam Limited and Rajasthan Urja Vikas Nigam Limited (RUVNL), rejecting MCCPL’s claim that the Scheduled Delivery Date (SDD) of 30.11.2016 fixed under the Power Purchase Agreement (PPA) stood revised to 01.04.2017, and that the first contract year for tariff purposes ought to be reckoned from the later date.

1. Delay of Two Years in seeking Long-Term Access cannot be termed as Force Majeure

MCCPL had attributed its inability to supply the full Aggregate Contracted Capacity of 250 MW by the SDD on the non-operationalization of Long-Term Access (LTA)/Medium-Term Open Access (MTOA), and sought to characterise this as a Force Majeure event under the PPA. The Appellate Tribunal rejected this contention. It noted that after submitting a LTA revision request, MCCPL “just adopted a wait and watch approach” and neither sent any reminder to PGCIL/CTU nor made any other effort to ensure that LTA for the full 250 MW was granted expeditiously, following up only on 13.08.2015, after its plant had already achieved Commercial Operation Date. The fresh LTA application, mandated because the change in target region exceeded 100 MW under the Connectivity Regulations, 2009, was filed over two years after the PPA was signed.

The Appellate Tribunal found no merit in MCCPL’s plea that this delay was attributable to “legal uncertainty and procedural ambiguity” on account of the methodology for calculating relinquishement charges pending before the Central Commission. It held that the fifth proviso to Regulation 12(1) of the Connectivity Regulations, 2009 “clearly provided that a fresh LTA application would be required” for a change exceeding 100 MW or a change of region, and the order on relinquishement charges passed by the Central Commission “only elaborates and explains” what the proviso already provided, without effecting any change in the regulatory position. Since Force Majeure grants relief only where the triggering event “could not have been avoided if the affected party had taken reasonable care or complied with prudent utility practices,” the Appellate Tribunal held that MCCPL “neither took reasonable care nor acted prudently” in pursuing its LTA request.

2. Commencement of supply “Upto” Aggregate Contracted Capacity does not require the entire quantum of electricity flowing

MCCPL’s case was that the SDD stood fulfilled only when the entire 250 MW commenced flowing, and that part supply of 45 MW alone on 30.11.2016 could not amount to commencement of supply under the PPA. The Appellate Tribunal disagreed, construing Article 4.1.1 and Article 4.2.1(b) together. It held that the expression “upto the Aggregated Contracted Capacity” indicates that “the seller may commence supply of power of any quantum, the maximum limit being the aggregated contracted capacity,” and that it was “not mandatory for the power generator i.e. the seller to supply the entire aggregated contracted capacity of power by the Scheduled Delivery Date i.e. 30.11.2016 in order to constitute commencement of supply of power.”

The Apellate Tribunal noted that MCCPL had itself served the advance preliminary notice (26.09.2016) and final written notice (27.10.2016) under Article 4.1.2 for commencement of supply “w.e.f 30.11.2016 i.e scheduled delivery date,” raised monthly invoices at the tariff payable for the first contract year, which were duly paid, and never conveyed to the Discoms that the SDD should be treated as suspended, split into phases, or held in abeyance pending availability of transmission capacity for the balance 205 MW. On this basis, the AppellateTribunal held that the supply of 45 MW from 30.11.2016 itself constituted “commencement of supply” under Article 4.1.1, and that the first Contract Year commenced from that date.

3. No Force Majeure event affected CTU, LTA was, in Fact, Operationalized ahead of Schedule

The Appellate Tribunal also rejected MCCPL’s reliance on Article 9.2.2, which deems a Force Majeure event affecting CTU/STU to be a Force Majeure event affecting the Seller. It observed that the 23rd Meeting of WR Constituents had recorded that the Champa-Kurukshetra HVDC Phase-I and Phase-II lines, and the Jabalpur-Orai line, were expected to be commissioned only in November 2016/March 2018 and April 2018 respectively, yet MCCPL’s LTA was in fact operationalized on 31.03.2017, “almost one year earlier” than the timeline earlier communicated by PGCIL. In these circumstances, the Appellate Tribunal held, “it cannot be said that there was any force majeure event affecting the PGCIL/CTU for providing transmission access to the appellant.”

4. Deliberate delay in Furnishing the Letter of Credit

The Appellate Tribunal found that even after the Champa-Kurukshetra line achieved Commercial Operation on 24.03.2017 and PGCIL/CTU called upon MCCPL on the same date to furnish a Letter of Credit (LC), MCCPL offered “no justification” for the delay in submitting the LC until 31.03.2017, resulting in commencement of the balance 205 MW supply only from 01.04.2017. The Appellate Tribunal held that this appeared to be a deliberate delay with an “ulterior motive,” observing that had supply commenced on any date between 24.03.2017 and 01.04.2017, the first contract year “would have been merely of a few days,” which MCCPL avoided so as to secure the higher first-contract-year tariff of Rs.1.633/kWh (as against Rs.1.558/kWh for the second Contract Year) for a full twelve-month period. The Appellate Tribunal termed such conduct “not acceptable.”

Conclusion

Holding that neither the delay in operationalization of LTA nor the timing of supply of the balance 205 MW was covered by Force Majeure under the PPA, and that commencement of supply of 45 MW on 30.11.2016 itself marked the beginning of the first contract year, the Appellate Tribunal answered both issues framed for its consideration against MCCPL. Finding no error or infirmity in the Impugned Order, the Appellate Tribunal dismissed Appeal No.183 of 2020, reaffirming that Scheduled Delivery Dates fixed under a PPA cannot be unilaterally shifted by a generator based on its own commercial convenience, and that claims of Force Majeure must be tested strictly against the diligence or lack thereof shown by the party invoking it.

Judgment Link

APTEL Directs the Central Commission to Exercise Power to Relax in Relation O&M Norms for Sole North-Eastern Transmission Licensee

In a judgment dated 08.07.2026, the Appellate Tribunal for Electricity (“Appellate Tribunal”) has ruled in favour of North East Transmission Company Limited (“NETCL”), setting aside the Order dated 27.01.2021 passed by the Central Electricity Regulatory Commission (“Central Commission”) in Petition No. 191/MP/2019, whereby the Central Commission had declined to exercise its power to relax the normative Operation and Maintenance (“O&M”) expenses prescribed under the Tariff Regulations, 2014.

By allowing Appeal No. 296 of 2021, the Appellate Tribunal has remanded the matter to the Central Commission with a specific direction to exercise its power to relax under Regulation 54 of the Tariff Regulations, 2014, for the limited purpose of working out the O&M charges for NETCL’s transmission assets for the control period 2014-19.

Brief Background

NETCL, a single-project transmission licensee engaged in evacuating power from the 2 x 363.3 MW Palatana Gas Based Power Project of ONGC Tripura Power Company Limited across five transmission assets in the North-Eastern Region, had relied on the Central Commission’s ownearlier order dated 16.04.2019, wherein the Central Commission had observed that NETCL, being a single asset company operating in the North-Eastern Region, “required consideration distinct from transmission licensees having multiple assets” and had granted liberty to file a fresh petition. NETCL contended that the Impugned Order, passed pursuant to that very liberty, contradicted the Central Commission’s earlier observation.

The Appellate Tribunal in the Appeal has proceeded to decide the issue on merits rather than resting its decision on the earlier order passed by the Central Commission alone.

1. Pan-India Normative Benchmark cannot be considered for Higher O&M costs of the North-East

NETCL demonstrated, relying on POWERGRID’s region-wise O&M data for 2014-15 drawn from the Statement of Reasons to the Tariff Regulations, 2014, that the North-Eastern Regionconstituting merely 3.25% of POWERGRID’s pan-India network of over 1,53,635 circuit kilometres incurred O&M costs of Rs. 0.75 lakh per circuit kilometre, which is 127% higher than the Western Region, 32% higher than the Northern Region and 79% higher than the Southern Region. It was NETCL’s case that when such costs are aggregated at the national level to derive a single normative benchmark of Rs. 0.403 lakh per circuit kilometre, the distinctly higher costs of the North-East get diluted within the national average, even though NETCL operates entirely within that region.

The Appellate Tribunal held that for a transmission licensee operating on a pan-India basis, aberrations in regional O&M costs can be mitigated when evaluated at the company level, but “the same mitigation is not feasible for a licensee whose operations are confined solely to the North Eastern Region, such as the Appellant”. The Appellate Tribunal also took note of NETCL’s submission that the rates independently determined for State Commission-regulated utilities operating under identical conditions in the region Rs. 0.85 lakh per circuit kilometre for AEGCL (Assam) and Rs. 1.09 lakh per circuit kilometre for MEPTCL (Meghalaya) were approximately twice the normative rate applied to NETCL.

2. Finding on Non-Submission of Data

The Impugned Order had recorded that NETCL“failed to submit data regarding O&M expenses while the Central Commission was engaged in formulating the norms for the control period 2019-24”. NETCL disputed this finding, pointing out that it had, in fact, submitted detailed operational and financial data in response to the Central Commission’s Public Notice dated 10.11.2017 inviting stakeholder comments on the Draft Tariff Regulations, 2019.

On scrutiny of the record, the Appellate Tribunal found substance in NETCL’s contention and held that the observation in the Impugned Order that no data was submitted by NETCL for finalising the O&M norms for the control period 2019-24 is contrary to the record and cannot be sustained, and accordingly set aside the Central Commission’s finding on this aspect.

3. Subsequent recognition of the North-East’s Operational challenges in the Central Commission Tariff Regulations

The Appellate Tribunal noted that the Central Commission has taken cognizance of the difficulties faced by licensees operating in the North-Eastern and hilly regions. The Explanatory Memorandum to the Draft Tariff Regulations, 2024 records that “the actual expenses incurred in the NER region are higher than compared to other regions” on account of increased logistic, erection, labour and transportation costs, and proposes a multiplication factor of 1.5 to the O&M expenses for licensees whose transmission assets are located solely in the North-Eastern Region, Uttarakhand, Himachal Pradesh, and the Union Territories of Jammu and Kashmir and Ladakh, a dispensation since incorporated as a proviso to Regulation 36(3) of the Tariff Regulations, 2024.

The Appellate Tribunal directed that while working out the O&M charges for NETCL on remand, the Central Commission shall also take into account this special dispensation accorded in the subsequent regulations for hilly and similarly placed licensees in the North-Eastern Region.

4. Exceptional circumstances justify exercise of the Power to Relax under the Tariff Regulations

The Appellate Tribunal held that Regulation 54 of the Tariff Regulations, 2014 confers on the Central Commission the power to relax any provision of the Regulations in exceptional circumstances, to be exercised not lightly or routinely, but where the factual matrix discloses circumstances of such peculiar nature that strict adherence to the regulatory norm would result in manifest hardship or inequity. Finding that NETCL’s operations are confined exclusively to the North-Eastern Region, characterised by hilly terrain, difficult accessibility and operational challenges not ordinarily encountered elsewhere, the Appellate Tribunal held that these constitute exceptional circumstances within the meaning of Regulation 54, and that “to insist upon a rigid application of the normative O&M charges in such a situation would be inequitable and contrary to the statutory mandate of ensuring reasonable recovery of costs”.

Accordingly, the Impugned Order was set aside and the matter remanded to the Central Commission with a direction to exercise its power to relax under Regulation 54 for working out NETCL’s O&M charges for the control period 2014-19, subject to a prudence check ensuring that only expenditure which is demonstrably necessary and reasonable is factored into the determination.

The judgment reaffirms that normative benchmarks derived on a pan-India basis cannot be mechanically applied to licensees whose operations are confined to regions with demonstrably higher operating costs, and underscores the availability of the power to relax as a corrective mechanism for such licensees operating under peculiar geographical and operational constraints.

Judgement Link

Group Captive Power Plant in India: A Structuring Guide for C&I Consumers

A group captive power plant is a generating station, often solar or wind, shared by two or more commercial and industrial (C&I) consumers who collectively hold at least 26% of its equity and consume at least 51% of its annual generation. Structured correctly under the Electricity Rules, 2005 (amended 2026), it delivers electricity exempt from cross-subsidy surcharge and additional surcharges.

For India’s commercial and industrial consumers, the group captive power plant has become the most popular route to cheaper, greener, more predictable electricity. It lets several businesses pool into a single renewable project, qualify for captive status together, and lawfully sidestep the surcharges that ordinary open-access consumers pay.

This guide explains how the structure works, how to build it, what the 2026 changes mean, and the decisions that matter most to C&I buyers, developers and lenders.

• A group captive power plant lets multiple C&I consumers share one plant and each claim captive benefits.
• The eligibility test is collective: captive users together must hold ≥26% equity and consume ≥51% of annual generation.
• An SPV that owns the plant is treated as an association of persons (AoP) under the rules.
• Under the 2026 framework, the 51% consumption test is met collectively, not user-by-user.
• A user holding 26% or more equity is exempt from the individual proportionate-consumption cap (the “anchor tenant” advantage).
• The core commercial driver is exemption from cross-subsidy surcharge (CSS) and additional surcharge (AS).

What is a group captive power plant?

A group captive power plant is a generating station set up so that two or more consumers can use its electricity for their own consumption while together meeting the legal thresholds for captive status. Instead of one company building a plant solely for itself, a group of C&I consumers invests in a shared project, and each draws power for its own use.

The appeal of the group captive structure is that it spreads the capital cost and the consumption obligation across several users, making a renewable project viable for businesses that individually could not justify a captive plant. A well-designed group captive structure also lets each participant size its equity to its own demand. For the underlying definitions, our explainer on what a captive generating plant is sets out the basis in full.

Why C&I consumers choose group captive

Three forces have pushed the group captive to the front of the C&I procurement toolkit:

• Captive consumption is exempt from cross-subsidy surcharge and additional surcharge, which can be a substantial share of an industrial consumer’s landed power cost. That single exemption is usually the deciding factor.
• A group captive solar or wind project lets a business meet renewable-energy and ESG targets while procuring power that is cheaper than grid supply.
• Reliability and price certainty. A long-term equity stake in a generating plant gives more predictable tariffs than market-linked grid power.

The 2026 reforms have added a fourth: regulatory certainty. By codifying how group structures, fellow subsidiaries and SPVs are treated, the rules have made the financial model far easier to underwrite. This is why developers and lenders are now actively building associations of persons’ captive structures at scale.

Group captive vs open access

The most common question from a C&I buyer is group captive vs open access savings, which structure delivers more value?

Both use the open-access network to wheel power from a remote renewable plant to the consumer’s premises. The decisive difference is surcharge treatment. A pure open-access consumer buying from a third-party generator pays a cross-subsidy surcharge and, often, an an additional surcharge. A genuine captive user, including a member of a group captive open access arrangement, is exempt from both on its captive consumption. Because a group captive open access structure keeps the surcharge exemption intact while still using the grid to wheel power, it is, over a 20–25 year project life, the option that typically outweighs the equity commitment and the compliance overhead a group captive demands.

How to structure a group captive power project in India

At a high level, building a compliant group captive power plant follows a recognisable path. The steps below are the backbone of any structuring exercise:

1. Identify the participating C&I consumers and map their annual electricity demand against the plant’s expected generation, so the group can comfortably clear the 51% collective consumption threshold.
2. Decide between an SPV (treated as an AoP), a cooperative society, or a direct AoP. The SPV route dominates the market.
3. Allocate at least 26% of the plant’s ownership to the captive users, aligning each user’s equity with its intended consumption and deciding whether any user will take a 26%+ anchor stake.
4. Execute the share subscription and shareholders’ agreement, the power supply / usage agreements, and the EPC and O&M contracts.
5. Secure connectivity, open access and the wheeling / banking arrangements with the transmission utility and the relevant load despatch centre.
6. Put in place metering, generation and consumption tracking, and the annual declaration and verification process.

An equity allocation that ignores the proportionate-consumption rule, or a shareholders’ agreement that does not lock in the 26% discipline, can quietly disqualify the plant. This is the heart of what group captive structuring lawyers in India add, designing the equity-and-consumption architecture so it survives annual verification.

SPV vs AoP: choosing the ownership vehicle

The group captive AoP vs SPV question is now largely settled by the rules themselves. An SPV (a company set up solely to own, operate and maintain the generating station) is expressly treated as an association of persons for captive purposes. An SPV captive power vehicle is the most common choice precisely because the rules now tell you how it will be treated, removing years of interpretational doubt.

What follows from AoP treatment is the proportionate-consumption framework. For a plant set up by an AoP (including an SPV):

• The 26% ownership and 51% consumption conditions are tested collectively across all captive users.
• Each individual user’s recognised captive consumption is capped at 100% of its proportionate share (its ownership percentage of generation).
• A user holding 26% or more ownership is exempt from that individual cap and can consume any amount as captive power.
• Where ownership changes mid-year, each user’s proportionate entitlement is set on a weighted-average shareholding basis.

What the Electricity (Amendment) Rules, 2026 changed

The Electricity (Amendment) Rules, 2026 have fully substituted Rule 3, bringing key clarity for group captive power plants. Captive consumption will now be assessed collectively across all captive users, reducing the risk of disqualification due to an individual minority user’s shortfall. Users holding 26% or more ownership are exempt from the individual proportionate-consumption cap, enabling promoter and lead-subsidiary structures. Companies within the same group, including holding companies, subsidiaries and fellow subsidiaries, are treated as a single captive user, with lateral ownership recognition. The amendment also resolves the long-standing dispute on whether an SPV constitutes an association of persons and recognises electricity consumed through plant-connected energy storage systems as valid captive consumption. Verification will be handled by the State-designated nodal agency for intra-state plants and by NLDC for inter-state plants, with appeals before a Grievance Redressal Committee. Pending verification, CSS and AS will not apply if the prescribed declaration is filed, though failure in verification will trigger surcharge liability with carrying cost. The proportionate consumption and verification provisions apply from 1 April 2026, while the remaining provisions took effect from 13 March 2026.

Group captive solar and wind projects

Most new group captive capacity is renewable. A group captive solar project is the textbook modern structure: a developer builds the plant through an SPV, C&I consumers take at least 26% equity collectively, and each draws power under a usage agreement while the group clears the 51% collective consumption test.

The 2026 recognition of energy-storage consumption as captive consumption directly supports group captive solar project legal structure design, because it lets solar-plus-storage configurations count stored-then-consumed energy toward captive use. Wind and hybrid wind-solar-storage projects work on the same principles. The structuring discipline is identical to any group captive: align equity with consumption, decide on an anchor tenant, and build the annual compliance engine from day one.

Conclusion

A group captive power plant rewards careful design and punishes loose structuring. R Associates advises C&I consumers, developers and lenders on equity architecture, documentation, open access and annual compliance. To structure or review a project with our captive power lawyers in India, get in touch with our team.