The Group Captive System: The idea!

<p>This way power companies can also work efficiently and there can be large power plants too, to meet the needs of many industries. Now, they sat down to make the rules on what makes the new Group Captive system!</p><p> </p><p>The rule goes like this. Every captive consumer should have shares in the new power plant. How much share should he have? Proportional to his consumption was an easy option. But then we need to look at many combinations where the captive consumer may not be able to exactly consume what he commits to consume. Neither can he consume, nor can the power generator promise to generate the exact number of kWh that the consumer wants!</p><p> </p><p>Given this situation, certain guidelines were set.</p><p> </p><p>All group captive consumers together should hold not less than 26% of the equity of the company and all group captive consumers together should consume not less than 51% of the power generated in that power plant. They can of course, hold more equity in the power plant and can consume more energy generated than 51%.</p><p> </p><p>The power plants also should be viable. They were allowed to sell the remaining power, post usage by their captive consumers to anyone they might choose to!</p><p> </p><p>To start with many states and state electricity boards, went out of the way to woo power generators to set up shop in their state. But that honeymoon did not last for more than five years.</p><p> </p><p>However, the people who framed the group captive system, also made a few pluses that these captive consumers and generators could enjoy. They were exempted from paying cross subsidy surcharge or any other surcharge, additional or otherwise.</p><p> </p><p>This was the only additional advantage for the captive user which was certainly motivating many consumers. In addition, the government set out new incentives to boost investment in power sector, particularly in renewables.</p><p> </p><p>Let us take a detailed look at the rules laid down in the Act and the Rules on Group Captive System.</p><p> </p><p> </p><p>(To be continued next week…)</p>