Latest news with #ERCs
The Hindu
3 days ago
- Business
- The Hindu
Electricity, a ‘public good', must not be vulnerable to ‘undue political posturing', says Supreme Court
The Supreme Court has expressed a lack of confidence on whether Electricity Regulatory Commissions (ERCs) are living up to the independence and autonomy afforded to them under the law. ERCs have the exclusive authority of tariff determination, play a pivotal role in the promotion of competition, and in ensuring reliable power supply across the country. The court said electricity is a 'public good' and a 'material resource', and is especially vulnerable to 'undue political posturing'. The ERCs were meant to serve as a bastion under the Electricity Act of 2003 to ensure that electricity was sold and distributed for the common good, unruffled by the politics of the day, and uninfluenced by the market forces of demand and supply. In an 82-page judgment, a Bench of Justices P.S. Narasimha and Sandeep Mehta has, however, questioned the very 'functional autonomy' of the ERCs, while drawing attention to the 'manage and manoeuvre' tactics employed to arrive at tariffs by creating regulatory assets 'over and above all permissible limits' prescribed by the electricity laws. A regulatory asset is adopted as a measure by the Regulatory Commissions when the gap between the revenue required by a power distribution company to meet its costs and expenditure, and the actual revenue realised through immediate tariff, is so high that it would not only prejudice the consumer but lead to what is called a 'tariff shock'. The court noted that, in recent times, ERCs have allowed power distribution companies' regulatory assets to balloon for decades without liquidating them, much to the detriment of the public, who have to bear the ultimate burden of paying more for electricity. This is despite the emphasis in the Electricity Act that the tariff fixed by ERCs must progressively reflect the cost of supply of electricity, and reduce cross subsidies. 'This is where the problem lies. Though the Electricity Act envisages functional autonomy for Regulatory Commissions, and the statutory scheme is complete in all respects, the decisions taken by the Commissions, many a time, have not inspired confidence of independence and autonomy. The reasons are not difficult to conceive as there is an issue about the appointment process. The assertion of independence, however, comes through individual volition and that is where the mandate of transparency leads to accountability,' Justice Narasimha, who authored the judgment, pointed out. The Act requires ERCs to work in cohesion with the State to ensure the supply of affordable power to all sections of society, across regions and terrains. 'But the adverse effect of an overbearing regulatory asset extended beyond proportion is an anathema to good governance of the Electricity Act… The regulatory asset cannot be permitted to balloon into such proportions or continue for such periods, year after year, that the governance of the sector is set in peril, affecting the rights of the utilities and at the same time jeopardising the consumer interest, who eventually end up bearing the burden,' the court noted. Issuing a series of directions, the apex court ordered that regulatory assets must not exceed the reasonable percentage as envisaged in the Electricity Rules. Existing regulatory assets must be liquidated in a maximum of seven years from April 1, 2024, and those created in future must be liquidated in three years from April 1, 2024. The court directed ERCs to provide the roadmap for liquidation of regulatory assets in future, and also undertake a strict and intensive audit of the circumstances in which distribution companies have continued without recovery of their regulatory assets.
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Business Standard
5 days ago
- Business
- Business Standard
Reliance Infra subsidiaries to recover ₹21,413 cr assets in 4 years
BSES Yamuna Power and BSES Rajdhani Power, material subsidiaries of Anil Ambani-promoted Reliance Infrastructure (R-Infra), will recover regulatory assets worth Rs 21,413 crore over four years, R-Infra said in a statement on Friday. The Delhi Electricity Regulatory Commission (DERC) has recognised the regulatory assets, while the Supreme Court, on 6 August, delivered its judgment on writ petitions and civil appeals filed by the two discoms in 2014. The petitions had challenged a non-cost-reflective tariff, the unlawful creation of regulatory assets, and the non-liquidation of such assets, R-Infra noted. Following hearings involving state governments and state electricity regulatory commissions (ERCs), the apex court issued guidelines for handling regulatory assets and directed their recovery. The court disposed of the writ petitions and civil appeals filed by the BSES discoms, setting out 10 'sutras' (guidelines) to examine issues relating to regulatory assets, their role in the regulatory regime for tariff determination, the duties and accountability of ERCs, and the powers of the Appellate Tribunal for Electricity (APTEL) to avert regulatory failure. It also issued nine directions to ERCs and APTEL covering cost-reflective tariff determination, the creation and amortisation of regulatory assets, and regulatory oversight by APTEL to monitor the implementation of ERC directions. R-Infra holds a 51 per cent stake in both BSES Yamuna Power and BSES Rajdhani Power, with the remaining 49 per cent owned by the government of the National Capital Territory of Delhi. Separately, R-Infra posted a consolidated profit (attributable to owners of the parent) of Rs 59.84 crore for the first quarter of FY26, compared to a loss of Rs 233.74 crore in Q1 FY25. Revenue from operations stood at Rs 5,907.82 crore, down 17.86 per cent year-on-year (YoY), while expenses declined 4.84 per cent YoY to Rs 6,469.81 crore.
Economic Times
5 days ago
- Business
- Economic Times
Reliance Infrastructure shares jump 8% from day's low. Here's why
The apex court has set out ten sutras to examine the issue relating to Regulatory Asset, its position in the regulatory regime for determination of tariff, the duties and accountability of the regulators. Reliance Infrastructure shares jumped nearly 8% after the Supreme Court allowed its subsidiaries BSES Yamuna and BSES Rajdhani Power to recover Rs 21,413 crore in regulatory assets over four years, issuing guidelines to electricity regulators for cost-reflective tariffs and timely liquidation of such assets. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Shares of Reliance Infrastructure surged nearly 8% from the day's low of Rs 269 to a high of Rs 290.70 on the BSE after its subsidiaries, BSES Yamuna Power and BSES Rajdhani Power , announced plans to recover about Rs 21,413 crore in regulatory assets over four to an exchange filing by the company, the Supreme Court has pronounced the judgment in connection with a Writ Petition and Civil Appeals filed by BSES Discoms, BSES Yamuna Power Limited and BSES Rajdhani Power Limited, material subsidiaries of Reliance Infra, in 2014. The discoms had approached SC, raising the issue of non-cost reflective tariff, unlawful creation of Regulatory Asset and non-liquidation of Regulatory Read | Over 50 mutual fund SIPs give negative returns in 1 year. Should you pause, redeem, or continue? The apex court has set out ten sutras to examine the issue relating to Regulatory Asset, its position in the regulatory regime for determination of tariff, the duties and accountability of the regulators - the Electricity Regulatory Commission (ERC) and the powers of the Appellate Tribunal for Electricity to avert regulatory SC has issued nine directions to ERCs and APTEL in respect of cost-reflective tariff determination, creation and amortisation of Regulatory Asset, and regulatory oversight by APTEL to monitor implementation of directions by ERCs, i.e as a first principle, tariff shall be cost-reflectiveThe revenue gap between the approved Aggregate Revenue Requirement and the estimated annual revenue from the approved tariff may occur in exceptional court further said that the regulatory asset should not exceed a reasonable percentage, which percentage can be arrived based on Rule 23 of the Electricity Rules, 2005 that prescribes 3% of the ARR as the guiding principle and if a Regulatory Asset is created, it must be liquidated within three years, taking Rule 23 as the guiding next direction is that the existing Regulatory Asset must be liquidated in a maximum of four years starting from 01.04.2024, taking Rule 23 as the guiding principle. The ERCs must provide the trajectory and roadmap for liquidation of the existing regulatory asset, which will include a provision for dealing with carrying costs, and the ERCs must also undertake a strict and intensive audit of the circumstances in which the discoms have continued without recovery of the Regulatory Asset, the court shall, in general, follow the principles governing creation, continuation and liquidation of the regulatory asset, as laid down in paragraph 70 of the Judgment, and also abide by the directions of the APTEL summarised in paragraph 69.8 of the Judgment, the filing mentioned that APTEL shall invoke its powers under Section 121 and issue such orders, instructions or directions as it may deem fit to the ERCs for performance of their duties concerning Regulatory Asset as enunciated in this judgment and lastly, APTEL shall register a suo moto petition under Section 121 of the Electricity Act to monitor implementation of above directions till the conclusion of the period mentioned therein.
Time of India
5 days ago
- Business
- Time of India
Reliance Infrastructure shares jump 8% from day's low. Here's why
Shares of Reliance Infrastructure surged nearly 8% from the day's low of Rs 269 to a high of Rs 290.70 on the BSE after its subsidiaries, BSES Yamuna Power and BSES Rajdhani Power , announced plans to recover about Rs 21,413 crore in regulatory assets over four years. According to an exchange filing by the company, the Supreme Court has pronounced the judgment in connection with a Writ Petition and Civil Appeals filed by BSES Discoms, BSES Yamuna Power Limited and BSES Rajdhani Power Limited, material subsidiaries of Reliance Infra, in 2014. The discoms had approached SC, raising the issue of non-cost reflective tariff, unlawful creation of Regulatory Asset and non-liquidation of Regulatory Asset. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Also Read | Over 50 mutual fund SIPs give negative returns in 1 year. Should you pause, redeem, or continue? The apex court has set out ten sutras to examine the issue relating to Regulatory Asset, its position in the regulatory regime for determination of tariff, the duties and accountability of the regulators - the Electricity Regulatory Commission (ERC) and the powers of the Appellate Tribunal for Electricity to avert regulatory failure. The SC has issued nine directions to ERCs and APTEL in respect of cost-reflective tariff determination, creation and amortisation of Regulatory Asset, and regulatory oversight by APTEL to monitor implementation of directions by ERCs, i.e as a first principle, tariff shall be cost-reflective The revenue gap between the approved Aggregate Revenue Requirement and the estimated annual revenue from the approved tariff may occur in exceptional circumstances. Live Events The court further said that the regulatory asset should not exceed a reasonable percentage, which percentage can be arrived based on Rule 23 of the Electricity Rules, 2005 that prescribes 3% of the ARR as the guiding principle and if a Regulatory Asset is created, it must be liquidated within three years, taking Rule 23 as the guiding principle. The next direction is that the existing Regulatory Asset must be liquidated in a maximum of four years starting from 01.04.2024, taking Rule 23 as the guiding principle. The ERCs must provide the trajectory and roadmap for liquidation of the existing regulatory asset, which will include a provision for dealing with carrying costs, and the ERCs must also undertake a strict and intensive audit of the circumstances in which the discoms have continued without recovery of the Regulatory Asset, the court said. Also Read | Multi asset mutual funds beat other hybrid funds in 1 & 3 years. Should they be in your portfolio? ERCs shall, in general, follow the principles governing creation, continuation and liquidation of the regulatory asset, as laid down in paragraph 70 of the Judgment, and also abide by the directions of the APTEL summarised in paragraph 69.8 of the Judgment, the filing said. It mentioned that APTEL shall invoke its powers under Section 121 and issue such orders, instructions or directions as it may deem fit to the ERCs for performance of their duties concerning Regulatory Asset as enunciated in this judgment and lastly, APTEL shall register a suo moto petition under Section 121 of the Electricity Act to monitor implementation of above directions till the conclusion of the period mentioned therein. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) ETMarkets WhatsApp channel )
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.
