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Informist, Monday, Sept. 22, 2025

 

NEW DELHI – The Delhi government and the Delhi Electricity Regulatory Commission on Monday moved the Supreme Court to seek modification of a Supreme Court verdict that asked them and other states and Union territories to clear their long-pending dues to the tune of over INR 1.5 trillion to power distribution companies in four years. The petitioners have sought that the time be modified from four years to seven years for paying the dues, and that the starting date be the date of the judgment on Aug. 6, rather than Apr. 1, 2024.

 

The petitioners said that consumers in the Union territory would be badly affected if the direction of paying dues in four years was implemented in the same form. The recovery of dues was necessarily to be effected prospectively through consumer tariffs, the Delhi government said. If the period of liquidation were to be construed as having commenced retrospectively from  Apr. 1, 2024, it would cause grave prejudice and undue hardship to consumers, in as much as a substantial portion of time – about one and a half years – has already elapsed, the petitioners said.

 

On Aug. 6, the top court directed that all regulatory commissions must provide a trajectory for liquidation of existing regulatory assets, which would include a provision for dealing with carrying costs. Regulatory assets refer to costs incurred by power distribution companies that are recoverable from customers in the future through regulated rates or tariffs. These are typically created when a distribution company incurs certain expenses that are considered necessary for the provision of reliable and affordable electricity services to customers, but are not immediately recoverable through customer bills. These expenses could include investments in infrastructure, such as transmission and distribution systems, or costs associated with complying with regulatory requirements. 

 

The apex court had said the regulatory commissions must also undertake a strict and intensive audit of the circumstances in which distribution companies have continued without recovery of the regulatory assets. A bench of justices P.S. Narasimha and Atul S. Chandurkar asked the Appellate Tribunal for Electricity to supervise the implementation of its directive. 

 

The apex court had observed that a disproportionate increase in long-pending regulatory assets ultimately put a burden on consumers. Inefficient and improper functioning of the regulatory commissions and acting under dictation could lead to regulatory failure, the apex court had said. 

 

It said that the regulatory asset should not exceed a reasonable percentage. If a regulatory asset is created, it must be liquidated within a period of three years, taking Rule 23 of the Electricity Rules as the guiding principle. The existing regulatory asset must be liquidated in a maximum of four years starting from Apr. 1, 2024, the court said.

 

The apex court was hearing petitions by BSES Rajdhani Power Ltd., BSES Yamuna Power Ltd. and Tata Power Delhi Distribution Ltd. challenging the manner in which the Delhi Electricity Regulatory Commission had determined the tariff for retail supply of electricity over the years, leading to the creation and continuation of a regulatory asset. The companies had sought amortisation of their undisputed regulatory assets. Over time, the top court expanded the scope of the petition to include all states that had not paid their long-pending dues to distribution companies.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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