JSA Prism | Electricity and Power | October 2026

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Ministry of Power issues directions under Section 11 of the Electricity Act, 2003 to captive coal-based plants with an installed capacity of fifty Megawatt and above

On September 25, 2026, the Ministry of Power (“MoP”) issued Directions (“Directions”) under Section 11 of the Electricity Act, 2003 (“Electricity Act”) to coal-based Captive Generating Plants (“CGPs”) with an installed capacity of 50 (fifty) Megawatt (“MW”) and above. The Directions are issued to optimise availability of electricity generation and ensure that all sources of electricity generation (including CGPs) run at maximum capacity from October 1, 2026 to December 31, 2026. MoP has issued the Directions to 112 (one hundred and twelve) entities (listed in the Annexure to the Directions), which primarily include steel, aluminum, cement and zinc manufacturing industries, along with chemical and fertiliser industries.

Background

1. Section 11 of the Electricity Act empowers the appropriate Government (either the Central or State Government) to require a generating company to operate and maintain any generating station in accordance with directions issued by the government in ‘extraordinary circumstances’, which include circumstances arising out of:
   • threat to security of the State or public order; or
   • natural calamity; or
   • any such other circumstances arising in the public interest.
2. Section 11(2) of the Electricity Act provides that the appropriate Commission, including Central Electricity Regulatory Commission and State Electricity Regulatory Commissions may offset the adverse financial impact on any generating company due to the directions issued under Section 11(1) of the Electricity Act.
3. Notably, these directions respond to the prevailing demand-supply mismatch, domestic coal shortage, increased demand due to the festive season and a warmer winter season predicted due to El Niño and aim to optimise power availability in the upcoming months.

Directions

From October 1, 2026 to December 31, 2026, the MoP has directed coal-based CGPs with an installed capacity of 50 (fifty) MW and above to:

1. generate to the maximum extent of their available capacity;
2. sell surplus power through power exchanges, after meeting their own captive demand;
3. maintain adequate coal stock to enable maximum generation; and
4. submit a weekly report to the Central Electricity Authority, which must include details of generation, captive consumption, sale of power through power exchanges or any other permitted avenues for sale of power, available capacity and coal stock.

Conclusion

The Directions aim to maximise output during the final quarter of the year and to ensure market availability of power across the country. However, some aspects remain unclear: (a) the Central Government’s competence to issue directions to CGPs connected to the State transmission utilities; (b) the pricing and cost-recovery framework under Section 11(2) of the Electricity Act; and (c) procedural/operational hurdles qua implementation of the directions. Such hurdles/lack of clarity pose regulatory uncertainty/challenges for the obligated CGPs.

This Prism has been prepared by:

Abhishek Munot Partner

Tushar Nagar Partner

Samikrith Rao Puskuri Principal Associate

Reet Nagpal Associate

For more details, please contact km@jsalaw.com.