An official announcement said the new policy, which removed anomalies, was designed to utilise captive generation for supplementing base load during peak hours, and protect interests of Gujarat Electricity Board (GEB) , while clearing the way for planned projects.

Under the new policy, those installing captive power plants would be allowed to supply power to other companies of their group by paying wheeling charges of 13.5 paise per unit for extra-high voltage and 21 paise for high voltage transmission. They must have 26 per cent holding in group companies.

The announcement said electricity duty and tax on sale of electricity to group companies will be assessed as if the supply was being made at the Gujarat Electricity Board tariff. Deductions for system losses will be made at the rate of 15 per cent from HV transmission and 10 per cent from EHV transmission.

The policy does not allow banking of power, or sale to third parties. However, GEB will purchase surplus power, as and when required, at a rate which will be calculated on the basis of full fuel cost reimbursement, plus 20 paise per unit for off peak and 30 paise per unit for peak hour usage towards capacity charges and operational and maintenance expenses.

On commissioning of the captive power plant, a unit would be allowed to reduce the existing contract demand with GEB up to 25 per cent. In case of new connections, the contract demand for parallel operations will be fixed according to the consumers' requirement. However, no contract demand will be necessary for stand-alone operators.