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Time of India
4 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.
Economic Times
4 days ago
- Business
- Economic Times
SC delivers key ruling on discom regulatory assets; power bills likely to go up across India
Synopsis The Supreme Court has directed all states and Union Territories to clear power distribution companies' regulatory assets within four years, potentially raising electricity bills nationwide. This ruling addresses the accumulation of over Rs 1.5 lakh crore in regulatory assets, accumulated by discoms like BSES and Tata Power, mandating a roadmap for their recovery and strict audits by regulatory commissions. Reuters India Power Sector (Image for representation) 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 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 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 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 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 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 addition, while the power purchase cost had increased, there had been no corresponding increase in the tariff for the last nine year, they 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
4 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.
India Today
4 days ago
- Business
- India Today
Electricity bills to rise as Supreme Court orders states to clear dues in 4 years
Electricity consumers across India should brace for a hike in power bills as the Supreme Court on Wednesday directed all states and Union Territories to clear long-pending dues owed to power distribution companies (DisComs) within four years. The dues, classified as "regulatory assets", have been accumulating for decades and now exceed Rs 1.5 lakh crore across the country.A bench of Justices PS Narasimha and Atul S Chandurkar passed a sweeping order asking State Electricity Regulatory Commissions (SERCs) to submit a time-bound roadmap for recovery of these amounts, while also tasking the Appellate Tribunal for Electricity (APTEL) to supervise the implementation of this court came down heavily on the regulatory commissions and APTEL itself for failing to curb the unchecked growth of regulatory assets over the years. "Disproportionate increase in long-pending regulatory assets ultimately puts burden on the consumer," the bench noted, adding that "inefficient and improper functioning of the Commission and acting under dictation can lead to regulatory failure".Regulatory assets refer to the shortfall between the actual cost of electricity supplied by DisComs and the lower tariffs approved by state regulators. To keep consumer tariffs affordable, regulators often defer these payments to DisComs, creating a backlog. Over time, these deferred payments attract interest, turning into ballooning the case began with petitions filed by Delhi-based DisComs, the Supreme Court expanded its scope and issued notices to all states with pending regulatory assets. Advocate Shri Venkatesh, appearing for Tata Power Delhi Distribution Ltd, told India Today TV that "for years various commissions and state governments, due to lack of political will, allowed the regulatory assets to grow. The SC has now ordered that all such dues must be amortised over four years".The top court affirmed that Parliament had vested electricity regulators and APTEL with sufficient authority under the Electricity Act to manage tariff and payment structures, but lamented the failure to use these powers the Supreme Court acknowledged that tariffs will need to rise, it cautioned that "tariff increase must be reasonable" and that "regulatory assets should not exceed statutory percentage" going K Srivastava, another lawyer involved in the case, said that the ruling may actually help consumers in the long run. "This was a ticking time bomb. Now, with a fixed four-year window, the cost will be distributed gradually. It's not like tariffs will jump overnight from Rs 2 to Rs 4 per unit. The increase will be marginal and shared across all categories — domestic, commercial, and industrial," he Supreme Court has also asked State Commissions to explore the possibility of de-linking recovery of regulatory assets from tariffs, if feasible, to minimise consumer Delhi Electricity Regulatory Commission (DERC) and other state regulators must now submit implementation plans, under the monitoring of APTEL, as India's power sector stares at one of the most significant billing adjustments in recent years.- EndsTrending Reel
Time of India
26-07-2025
- Politics
- Time of India
'Forgive, move on': Supreme Court advises Balakot pilot and wife to end marital dispute amicably
"Forgive each other and move ahead," the Supreme Court has told a fighter pilot, who took part in the 2019 Balakot strike, and his wife, involved in a matrimonial dispute. A bench of Justices P S Narasimha and Atul S Chandurkar asked the couple to amicably settle the dispute between them. Explore courses from Top Institutes in Please select course: Select a Course Category Public Policy MCA MBA CXO Product Management Operations Management Technology Others Management Design Thinking Leadership Data Science Data Analytics Finance Digital Marketing Healthcare others PGDM Data Science Artificial Intelligence Project Management healthcare Degree Cybersecurity Skills you'll gain: Duration: 12 Months IIM Calcutta Executive Programme in Public Policy and Management Starts on undefined Get Details Skills you'll gain: Economics for Public Policy Making Quantitative Techniques Public & Project Finance Law, Health & Urban Development Policy Duration: 12 Months IIM Kozhikode Professional Certificate Programme in Public Policy Management Starts on Mar 3, 2024 Get Details "Do not lead a life of revenge. Both of you are young, and a long life is ahead of you, and you should live a good life. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas For Sale in Dubai Might Surprise You Dubai villas | search ads Get Deals Undo "You just forgive and forget each other and move ahead," the bench said, while issuing notice on an air force officer's petition for quashing of an FIR lodged against him by his wife, an IIM graduate. The pilot submitted that he and his family members were victims of continuous mental harassment by his wife and father-in-law. Live Events The fighter pilot moved to the top court after his plea for quashing the FIR was rejected by the Punjab and Haryana High Court.
