In Brief
This judgment interprets the Electricity Act, 2003 and the Electricity Rules, 2005 to define when a power plant qualifies as a Captive Generating Plant (CGP) and who can be a captive user. The Supreme Court held that Special Purpose Vehicles (SPVs) set up by companies to own and operate CGPs are "associations of persons" under the Rules. All captive users, whether individual or in groups, must maintain minimum 26% ownership and consume at least 51% of generated electricity annually. For group captive users, consumption must be proportionate to shareholding (with 10% tolerance). The minimum thresholds must be maintained throughout the financial year, not just at year-end. The judgment emphasizes legislative intent to promote energy independence for industries while preventing abuse through disproportionate ownership-consumption ratios.
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