The Supreme Court on Friday stayed the Delhi government's CAG audit of power distribution companies ordered against the backdrop of a staggering ₹38,500 crore accumulated over the years as Regulatory Assets (RA) to be recovered from consumers. A partial working day bench of Justices KV Viswanathan and Shree Chandrashekhar took note of the submissions of Solicitor General Tushar Mehta, appearing for power regulator Delhi Electricity Regulatory Commission (DERC) and senior advocate Abhishek Singhvi, appearing for private discoms. The court's intervention comes after the Delhi government had ordered the audit on Thursday, marking a significant development in the ongoing dispute over regulatory asset recovery.
The Delhi government had ordered a Comptroller and Auditor General (CAG) audit of power distribution companies over ₹38,500 crore in regulatory assets that are ultimately recoverable from electricity consumers. According to reports from Business Standard, the audit will be conducted against the backdrop of a staggering amount accumulated over the years as Regulatory Assets (RA) that are to be recovered from consumers. The Delhi Cabinet, in its meeting chaired by Chief Minister Rekha Gupta on June 29, recommended in public interest 'a strict and intensive' audit of the circumstances under which discoms - BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Limited (BYPL) and Tata Power Delhi Distribution (TPDDL) - have continued without recovery of regulatory assets. The CAG was to undertake a 'strict and intensive' audit of the circumstances under which discoms have continued without recovery of regulatory assets.
As reported by Business Standard, the audit may preferably be completed within three months from the date of communication of the order, subject to any extension that the CAG may consider according to the scope and complexity of the audit. The formal order for the CAG audit of the discoms is a 'historic moment for transparency, accountability and governance reforms' in Delhi's power sector, according to Power Minister Ashish Sood. The order issued by the Power Department has been approved by the Lieutenant Governor of Delhi. In compliance with Section 20(3) of the Act, notices were issued to the discoms on June 6, asking them to submit their representations and avail the opportunity of a personal hearing on the matter. Representations of the discoms were examined as per law and the issue was also considered by the Cabinet meeting chaired by Chief Minister Rekha Gupta.
According to the Delhi Electricity Regulatory Commission (DERC) filing before the Appellate Tribunal for Electricity (APTEL), the outstanding RA amount includes ₹19,174 crore for BRPL, ₹12,333 crore for BYPL, and ₹7,046 crore for TPDDL. As reported by Business Standard, the amount has swollen to ₹38,500 crore as there has been no tariff hike in more than one decade. These regulatory assets refer to deferred expenses borne by the discoms out of changes in fuel costs, determined as the gap between the average cost of supply by the discoms and the revenue collected by them through tariffs and subsidies. The ₹38,500 crore owed to the three discoms is to be paid through a regulatory assets surcharge which is part of the electricity bills of consumers.
In April this year, the Appellate Tribunal for Electricity (APTEL) had rejected a Delhi Electricity Regulatory Commission (DERC) application for CAG audit of the discoms, and directed the Commission to initiate liquidation of pending RAs within three weeks. According to Business Standard, the CAG through its communication dated January 20 this year, has conveyed its in-principle approval to undertake the audit of accounts of the three discoms, upon an authorisation by the Delhi LG under Section 20(1) of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971. The Supreme Court, in its order on August 6, 2025, had directed a strict and intensive audit of the circumstances in which the discoms continued without recovery of Regulatory Assets. This marks the first time that the power discoms will go through a CAG audit in Delhi since the privatisation of electricity distribution in 2002, if they do not take legal recourse.
A BRPL spokesperson stated that 'The question of a CAG audit of the Delhi discoms is currently sub judice before the courts. As the matter is under judicial consideration, it would not be appropriate to comment further', as reported by Business Standard. No reaction was available from other discoms. Power Minister Ashish Sood emphasized that 'The people of Delhi have every right to know how regulatory assets worth nearly ₹38,000 crore kept growing and who benefited while this burden continued to hang over them' and asserted that every rupee of public money must be protected. The Power Minister noted that 'for years after the privatisation of power distribution, many financial decisions, special arrangements and growing liabilities escaped proper public scrutiny. The previous AAP government chose to protect the system instead of examining it. What they failed to do in ten years, our Government has initiated within a few months'.
