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Business Upturn
5 days ago
- Business
- Business Upturn
Reliance Infrastructure subsidiaries to recover Rs 21,413 crore regulatory assets over four years as per Supreme Court ruling
By Aditya Bhagchandani Published on August 8, 2025, 10:27 IST Reliance Infrastructure Limited announced that its material subsidiaries, BSES Yamuna Power Limited and BSES Rajdhani Power Limited, have secured the right to recover approximately Rs 21,413 crore worth of regulatory assets over the next four years. This follows a Supreme Court judgement pronounced on August 6, 2025, which set clear guidelines for the recovery process. The judgement, stemming from writ petitions and civil appeals filed in 2014, addressed issues including non-cost reflective tariffs, unlawful creation of regulatory assets, and delays in liquidation. The Court outlined ten principles for regulatory asset management and issued nine directives to Electricity Regulatory Commissions (ERCs) and the Appellate Tribunal for Electricity (APTEL). Among the key directives, the Court mandated that regulatory assets should not exceed a reasonable percentage of the Aggregate Revenue Requirement (ARR) and must be liquidated within three years if newly created, and within four years for existing assets starting April 1, 2024. ERCs are required to provide a clear liquidation roadmap and conduct strict audits, while APTEL will oversee compliance. Reliance Infrastructure, a major player in power distribution and infrastructure development, said the DERC-approved regulatory assets for its subsidiaries will now be liquidated within the stipulated timeline. Ahmedabad Plane Crash Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Time of India
6 days ago
- Business
- Time of India
SC delivers key ruling on discom regulatory assets; power bills likely to go up across India
In a ruling that may have huge impact on consumers across the country, the Supreme Court on Wednesday asked all states and Union Territories (UTs) to clear within four years the regulatory assets of the power distribution companies, including BSES companies and Tata Power Delhi Distribution ( TPDDL ), a decision that is likely to increase electricity bills across India. Reliance Infra-backed power distribution utilites BSES Rajdhani Power (BRPL) and BSES Yamuna Power (BYPL) and Tata Power TPDDL had sought amortisation of their 'undisputed' regulatory assets, which according to industry estimates, has exceeded over Rs 1.5 lakh crore across the country. As on March 31, 2024, the regulatory asset including carrying costs for BRPL is Rs 12,993.53 crore, Rs 8419.14 crore for BYPL and Rs 5,787.70 crore for TPDDL, totally amounting to Rs 27,200.37 crore across all three distribution companies in Delhi. Regulatory assets, which are costs incurred by discoms but recovered or recovered over a period of time, have been accumulating for decades. A bench comprising Justices PS Narasimha and Atul S Chandurkar while issuing notice to all states with pending regulatory assets asked their state electricity regulatory commissions to submit a time-bound roadmap for recovery of these regulatory assets, while also tasking the Appellate Tribunal for Electricity to supervise the implementation of its directions. 'Regulatory Commissions must provide the trajectory and roadmap for liquidation of the existing regulatory asset which will include a provision for dealing with carrying costs. Regulatory Commissions must also undertake strict and intensive audit of the circumstances in which the distribution companies have continued without recovery of the regulatory asset,' Justice Narasimha, writing the judgment for the Bench. 'In case of non-compliance with these directions, the APTEL has the power and duty to call for an explanation, ensure accountability, and monitor compliance by the Regulatory Commissions. Similarly, the APTEL must exercise its powers under Section 121 to ensure that the legal principles on regulatory asset laid down by us are complied with by the Regulatory Commissions, and it must monitor the same. In case of non-compliance, the APTEL must issue such orders, directions, or instructions to the Commissions as may be necessary to hold them accountable,' the top court said. Existing regulatory asset must be liquidated in a maximum of four years starting from April 1, 2024, it said. "As a first principle, tariff shall be cost-reflective; the revenue gap between the approved ARR (Aggregate Revenue Requirement) and the estimated annual revenue from approved tariff may be in exceptional circumstances; the regulatory asset should not exceed a reasonable percentage, which percentage can be arrived on the basis of Rule 23 of the Electricity Rules that prescribes 3% of the ARR as the guiding principle; if a regulatory asset is created, it must be liquidated within a period of 3 years, taking Rule 23 as the guiding principle," the judgement stated while laying the broader outline for the commissions. Stating that all such dues must be amortised over four years, the top court said that disproportionate increase and long pending regulatory asset depict a 'regulatory failure'. 'It has serious consequences on all stakeholders and the ultimate burden is only on the consumer. Ineffective and inefficient functioning of the Regulatory Commissions, coupled with acting under dictation can lead to regulatory failure. The commissions are accountable for their decisions, and they are subject to judicial review,' it said. Welcoming the judgment, advocate Shri Venkatesh, appearing for Tata Power Delhi Distribution, told ET that 'the Supreme Court's judgment has decisively unlocked the value chain of electricity regulation while addressing the systemic misuse of the Regulatory Asset mechanism.' 'For decades, tariff deferments were used as a political and regulatory crutch, distorting the true cost of supply and pushing discoms into unsustainable debt. By mandating a time-bound liquidation plan and empowering APTEL to supervise compliance, the court has enforced long-ignored statutory discipline under the Electricity Act. This judgment not only restores financial credibility to discoms but also reinforces the principle that consumer tariffs must be cost-reflective and grounded in transparent regulatory processes,' Venkatesh said. "However, it is possible that the states may not want to pass it down to the consumers as it will raise tariffs. In that case, they may want to take it over. But if that were the case, they could have done it earlier," a central government official said. Vikram V, Vice President & Co-Group Head, ICRA, too termed it as a "positive development for the sector if implemented in the true spirit." He said that "ideally, there should not have been a large build-up of regulatory assets. However, large delays in issuance of tariff orders and lack of tariff revision in line with the cost structure led to this situation. Going forward, avoiding such build-up of regulatory assets would require timely pass through of cost variations by the discoms to the consumers. This will also enable the discoms to become self-sustaining." Commenting on the judgment, counsel Amit Kapur, who appeared for BSES companies, said, 'An accumulated national regulatory asset of over Rs.1.68 lakh crores means a real average tariff shortfall/deferment of virtually Re.1 per unit. A contingent liability forced on unsuspecting consumers of interest (carrying cost) of 15.5% per annum (at times on compounding basis) to be recovered with the regulatory asset over time." "This judgment, if implemented sincerely, can put Indian power sector back on track of creditworthiness and become an attractive destination for investments which will help us achieve our goal of energy transition," the counsel for BSES companies said. The ruling came on a couple of appeals filed by Delhi-based BSES firms and Tata Power seeking a direction to DERC to provide a roadmap for liquidation of the recognised amount of Revenue Gap/Regulatory Asset within a definite time frame and within a period not exceeding three years at the most. Seeking recognition of the Regulatory Asset and amortization of the Regulatory Asset within a period of 3 years, Tata Power Delhi Distribution had alleged that the Commission had consistently deferred the tariff costs legitimately owed to it by creating 'Regulatory Assets.' The discoms had alleged that the DERC's creation of Regulatory Assets was not only without a legal sanction but also in grave violation of the settled scheme of the Act, the policies and directives issued by the Central Government and the Judgments passed by the Aptel. In addition, while the power purchase cost had increased, there had been no corresponding increase in the tariff for the last nine year, they alleged. According to Justice Narsimha, 'Regulatory failure' occurs due to ineffective functioning of the Regulatory Commissions, excessive governmental interference, or 'regulatory capture'. 'We cannot wish away these real and imminent dangers that affect effective functioning of the Regulatory Commissions. These issues could have the effect of completely eclipsing regulatory functions, thereby losing the very purpose and object of restructuring the electricity sector by unbundling the functions of generation, distribution, and transmission and more importantly, establishing independent regulatory institutions and granting them the exclusive jurisdiction over grant of licenses and tariff determination. 'We have affirmed the limits of the creation, continuation and liquidation of the regulatory asset, recognised the obligations of the commissions and directed that they will be accountable and subject to such orders, instructions and directions of the Aptel, and the regulatory regime under the Electricity Act,' the apex court said.
Time of India
6 days ago
- Business
- Time of India
SC delivers key ruling on discom regulatory assets; power bills likely to go up across India
In a ruling that may have huge impact on consumers across the country, the Supreme Court on Wednesday asked all states and Union Territories (UTs) to clear within four years the regulatory assets of the power distribution companies, including BSES companies and Tata Power Delhi Distribution ( TPDDL ), a decision that is likely to increase electricity bills across India. Reliance Infra-backed power distribution utilites BSES Rajdhani Power (BRPL) and BSES Yamuna Power (BYPL) and Tata Power TPDDL had sought amortisation of their 'undisputed' regulatory assets, which according to industry estimates, has exceeded over Rs 1.5 lakh crore across the country. As on March 31, 2024, the regulatory asset including carrying costs for BRPL is Rs 12,993.53 crore, Rs 8419.14 crore for BYPL and Rs 5,787.70 crore for TPDDL, totally amounting to Rs 27,200.37 crore across all three distribution companies in Delhi. Regulatory assets, which are costs incurred by discoms but recovered or recovered over a period of time, have been accumulating for decades. A bench comprising Justices PS Narasimha and Atul S Chandurkar while issuing notice to all states with pending regulatory assets asked their state electricity regulatory commissions to submit a time-bound roadmap for recovery of these regulatory assets, while also tasking the Appellate Tribunal for Electricity to supervise the implementation of its directions. 'Regulatory Commissions must provide the trajectory and roadmap for liquidation of the existing regulatory asset which will include a provision for dealing with carrying costs. Regulatory Commissions must also undertake strict and intensive audit of the circumstances in which the distribution companies have continued without recovery of the regulatory asset,' Justice Narasimha, writing the judgment for the Bench. 'In case of non-compliance with these directions, the APTEL has the power and duty to call for an explanation, ensure accountability, and monitor compliance by the Regulatory Commissions. Similarly, the APTEL must exercise its powers under Section 121 to ensure that the legal principles on regulatory asset laid down by us are complied with by the Regulatory Commissions, and it must monitor the same. In case of non-compliance, the APTEL must issue such orders, directions, or instructions to the Commissions as may be necessary to hold them accountable,' the top court said. Existing regulatory asset must be liquidated in a maximum of four years starting from April 1, 2024, it said. "As a first principle, tariff shall be cost-reflective; the revenue gap between the approved ARR (Aggregate Revenue Requirement) and the estimated annual revenue from approved tariff may be in exceptional circumstances; the regulatory asset should not exceed a reasonable percentage, which percentage can be arrived on the basis of Rule 23 of the Electricity Rules that prescribes 3% of the ARR as the guiding principle; if a regulatory asset is created, it must be liquidated within a period of 3 years, taking Rule 23 as the guiding principle," the judgement stated while laying the broader outline for the commissions. Stating that all such dues must be amortised over four years, the top court said that disproportionate increase and long pending regulatory asset depict a 'regulatory failure'. 'It has serious consequences on all stakeholders and the ultimate burden is only on the consumer. Ineffective and inefficient functioning of the Regulatory Commissions, coupled with acting under dictation can lead to regulatory failure. The commissions are accountable for their decisions, and they are subject to judicial review,' it said. Welcoming the judgment, advocate Shri Venkatesh, appearing for Tata Power Delhi Distribution, told ET that 'the Supreme Court's judgment has decisively unlocked the value chain of electricity regulation while addressing the systemic misuse of the Regulatory Asset mechanism.' 'For decades, tariff deferments were used as a political and regulatory crutch, distorting the true cost of supply and pushing discoms into unsustainable debt. By mandating a time-bound liquidation plan and empowering APTEL to supervise compliance, the court has enforced long-ignored statutory discipline under the Electricity Act. This judgment not only restores financial credibility to discoms but also reinforces the principle that consumer tariffs must be cost-reflective and grounded in transparent regulatory processes,' Venkatesh said. "However, it is possible that the states may not want to pass it down to the consumers as it will raise tariffs. In that case, they may want to take it over. But if that were the case, they could have done it earlier," a central government official said. Vikram V, Vice President & Co-Group Head, ICRA, too termed it as a "positive development for the sector if implemented in the true spirit." He said that "ideally, there should not have been a large build-up of regulatory assets. However, large delays in issuance of tariff orders and lack of tariff revision in line with the cost structure led to this situation. Going forward, avoiding such build-up of regulatory assets would require timely pass through of cost variations by the discoms to the consumers. This will also enable the discoms to become self-sustaining." The ruling came on a couple of appeals filed by Delhi-based BSES firms and Tata Power seeking a direction to DERC to provide a roadmap for liquidation of the recognised amount of Revenue Gap/Regulatory Asset within a definite time frame and within a period not exceeding three years at the most. Seeking recognition of the Regulatory Asset and amortization of the Regulatory Asset within a period of 3 years, Tata Power Delhi Distribution had alleged that the Commission had consistently deferred the tariff costs legitimately owed to it by creating 'Regulatory Assets.' The discoms had alleged that the DERC's creation of Regulatory Assets was not only without a legal sanction but also in grave violation of the settled scheme of the Act, the policies and directives issued by the Central Government and the Judgments passed by the Aptel. In addition, while the power purchase cost had increased, there had been no corresponding increase in the tariff for the last nine year, they alleged. According to Justice Narsimha, 'Regulatory failure' occurs due to ineffective functioning of the Regulatory Commissions, excessive governmental interference, or 'regulatory capture'. 'We cannot wish away these real and imminent dangers that affect effective functioning of the Regulatory Commissions. These issues could have the effect of completely eclipsing regulatory functions, thereby losing the very purpose and object of restructuring the electricity sector by unbundling the functions of generation, distribution, and transmission and more importantly, establishing independent regulatory institutions and granting them the exclusive jurisdiction over grant of licenses and tariff determination. 'We have affirmed the limits of the creation, continuation and liquidation of the regulatory asset, recognised the obligations of the commissions and directed that they will be accountable and subject to such orders, instructions and directions of the Aptel, and the regulatory regime under the Electricity Act,' the apex court said.
Time of India
08-05-2025
- Business
- Time of India
From May 16, flyers to pay more for tickets as user fee for Mumbai airport hiked
Mumbai: Airfares on domestic and international flights operating to and from Mumbai airport are set to cost more from May 16, as the Airports Economic Regulatory Authority of India (AERA) has approved a hike in User Development Fee (UDF). Like taxes and fuel surcharges, UDF is embedded in the cost of the airline a "Development Fee" of Rs 120 per departing domestic passengers was levied till Aug 2024, the AERA order said. Currently, only the international departing passenger pays a UDF, levied at Rs 187."The UDF will be levied on tickets booked on May 16 and thereafter," clarified an aviation source. The UDF levy will be applicable for flights booked from May 16, 2025, to March 31, the domestic front, a UDF of Rs 175 will be levied on passengers booked on flights departing from Mumbai, and a fee of Rs 75 on those arriving in Mumbai. For international flights, the UDF fee is split further based on the class booked. International departing economy class passengers will pay a UDF of Rs 615, while those arriving will pay Rs 260. For international business class passengers, the fee is Rs 695 and Rs 304 for embarking and disembarking passengers, this, the cost of one domestic ticket to and from Mumbai will go up by Rs 250, international economy return tickets will increase by Rs 875, and for business class, the hike will be Rs 999. However, if you already booked air tickets on flights departing or arriving in Mumbai post-May 16, you do not have to pay this UDF. Those booking air tickets in the next week will also be a UDF for airport facilities is a common practice worldwide, though most airports limit it to departing in its tariff order, stated: "UDF now has been determined for both embarking and disembarking passengers as a significant portion of the airport infrastructure, including aero bridges, travelators, conveyor belts, and arrival facilities inside the terminal building, are also being used by both embarking and disembarking passengers. Therefore, distributing the overall UDF charges between embarking and disembarking passengers in a suitable proportion of their actual usage of airport facilities would lead to an equitable distribution of the tariff burden amongst the users of the airport and would also spread out the costs amongst all airport users." Airports such as Delhi and Thiruvananthapuram also levy a UDF on arriving Mumbai airport operator, in their tariff proposal submitted to AERA for the Aggregate Revenue Requirement (ARR) during 2024-29, entailed an increase of 675% in the prevailing airport charges. "However, AERA, after carrying out a thorough examination of the said proposal, has arrived at a significantly lower ARR that would result in a nominal increase of 21.65% over the existing airport charges. This adjustment will enable the airport operator to meet essential capital expenditure requirements, maintain operational efficiency, and ensure service quality," it on its calculations, AERA arrived at a Yield per Passenger (YPP) of Rs 442 per departing passenger for MIAL and distributed this between domestic and international departing and arriving passengers.
Time of India
29-04-2025
- Business
- Time of India
No power tariff hike in Telangana this year
Hyderabad: Electricity consumers in Telangana will not face any tariff hike in the financial year 2025-26. The Telangana State Electricity Regulatory Commission ( TGERC ) on Tuesday issued orders on the Aggregate Revenue Requirement (ARR) proposals submitted by the Telangana Southern and Northern Power Distribution Companies (TGSPDCL and TGNPDCL). Tired of too many ads? go ad free now TGERC chairperson Devaraju Nagarjun stated that the commission approved an expenditure of Rs 58,628 crore, compared to the Rs 65,849 crore sought by the discoms. While the discoms projected a revenue gap of Rs 20,151 crore, the commission approved a lower gap of Rs 13,122 crore. To support this, the state govt informed the commission it would provide a subsidy of Rs 13,499 crore. This includes funding for free power to the agriculture sector and the newly introduced Gruha Jyothi scheme, which offers up to 200 units of free power to poor domestic consumers. The power subsidy has increased by Rs 1,999 crore— around 17% higher than last year's commitment. The discoms had submitted their ARRs in Jan, and public hearings were held in March. The commission also fixed grid support charges at Rs 18 per kW/month, lower than the Rs 20 per kW/month proposed by the discoms.
