UPSC Prelims Practice Questions — Centre amends rules to strengthen captive power generation

Q1. Which one of the following authorities notified the Electricity (Amendment) Rules, 2026 that overhauled Rule 3 of the Electricity Rules, 2005 governing Captive Generating Plants?

  • A. Ministry of New and Renewable Energy
  • B. Ministry of Power
  • C. Central Electricity Authority
  • D. Central Electricity Regulatory Commission

Q2. In the context of Rule 3 of the Electricity Rules, 2005 (as amended in 2026), which one of the following best defines a 'Captive Generating Plant' (CGP)?

  • A. A generating station owned by a State distribution utility for supplying electricity exclusively to industrial consumers within its licence area
  • B. A power plant set up by any person to generate electricity primarily for his own use, in which the captive user(s) hold not less than 26% of the ownership and consume not less than 51% of the aggregate electricity generated in a year
  • C. A renewable energy generating station registered under the Green Energy Open Access Rules whose entire output is procured by a single bulk industrial consumer
  • D. A grid-connected generating station of installed capacity below 25 MW dedicated to supplying Central or State government undertakings

Q3. The right of any person to construct, maintain or operate a captive generating plant and dedicated transmission lines, without requiring a licence for supply to consumers, is expressly conferred by which one of the following provisions?

  • A. Section 7 of the Electricity Act, 2003
  • B. Section 9 of the Electricity Act, 2003
  • C. Section 14 of the Electricity Act, 2003
  • D. Section 42 of the Electricity Act, 2003

Q4. With reference to the Electricity (Amendment) Rules, 2026 as compared with the pre-amendment position under Rule 3 of the Electricity Rules, 2005, consider the following statements: 1. The amendments expand the definition of 'ownership' of a Captive Generating Plant to expressly include the holding company and other subsidiaries of the holding company of the entity establishing the plant. 2. Electricity consumed by a captive user through an Energy Storage System interposed between the Captive Generating Plant and the user now expressly qualifies as captive consumption. 3. The amendments have raised the minimum equity ownership threshold for captive users from 26% to 51%. Which of the statements given above is/are correct?

  1. The amendments expand the definition of 'ownership' of a Captive Generating Plant to expressly include the holding company and other subsidiaries of the holding company of the entity establishing the plant.
  2. Electricity consumed by a captive user through an Energy Storage System interposed between the Captive Generating Plant and the user now expressly qualifies as captive consumption.
  3. The amendments have raised the minimum equity ownership threshold for captive users from 26% to 51%.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. With reference to the verification and consumption framework for Captive Generating Plants under Rule 3 as amended by the Electricity (Amendment) Rules, 2026, consider the following: 1. State-designated Nodal Agency — verifies captive status of intra-State captive arrangements. 2. National Load Despatch Centre (NLDC) — verifies captive status of inter-State captive arrangements. 3. Central Electricity Regulatory Commission (CERC) — is designated as the sole authority for verifying proportionate consumption in all group captive (Association of Persons) arrangements. 4. Energy Storage System (ESS) interposed between the Captive Generating Plant and the captive user — drawal through such ESS expressly qualifies as captive consumption. Which of the above is/are correctly identified?

  1. State-designated Nodal Agency — verifies captive status of intra-State captive arrangements.
  2. National Load Despatch Centre (NLDC) — verifies captive status of inter-State captive arrangements.
  3. Central Electricity Regulatory Commission (CERC) — is designated as the sole authority for verifying proportionate consumption in all group captive (Association of Persons) arrangements.
  4. Energy Storage System (ESS) interposed between the Captive Generating Plant and the captive user — drawal through such ESS expressly qualifies as captive consumption.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 4
  • D. 3 only