Delhi power commission asks SC 7 years to liquidate discoms’ regulatory assets

The DERC said that the regulatory assets (RA) as of March 31, 2024, in favour of the three discoms—BSES Rajdhani, BSES Yamuna and Tata Power—is to the tune of ₹31,552 crore, and liquidating assets to this amount would result in passing the burden on to consumers

New Delhi

The court said the application will have to be taken up by the bench that passed the previous order. (HT Archive)

In a measure to pre-empt sharp power tariff revision to consumers in Delhi, the Delhi Electricity Regulatory Commission (DERC) has approached the Supreme Court seeking it modify its order issued last month directing the liquidation of regulatory assets accumulated in favour of private discoms by April 2028.

Filing an application against an August 6 order, the DERC said that the regulatory assets (RA) as of March 31, 2024, in favour of the three discoms—BSES Rajdhani, BSES Yamuna and Tata Power—is to the tune of ₹31,552 crore, and liquidating assets to this amount would result in passing the burden on to consumers.

The court had fixed a four-year period from April 1, 2024, to liquidate RA, but the DERC said that doing so would result in a 70-80% tariff spike to consumers. It said that a seven-year timeline, instead, could absorb the “price shock”.

The application was taken up on Monday by a bench of justices PS Narasimha and AS Chandurkar, which said that it will have to consult the Chief Justice of India (CJI) to list the application as it may require a hearing before the bench which passed the judgment. The August 6 decision was taken by a bench headed by justice Narasimha, along with justice Sandeep Mehta.

Solicitor General Tushar Mehta, appearing for DERC, told the court that while private discoms must earn profit, the common man will suffer most if the timeline is not extended. “We want less tariff shock on individual citizens. If the 4 years is changed to 7 years, the shock will be distributed so that the common man does not suffer.”

The plea was opposed by discoms, represented by senior advocates Kapil Sibal and Abhishek Manu Singhvi.

“Suddenly, they are thinking of consumers. From 2004, we have been asking for amortisation of RAs. And now the four-year period is sought to be made into 7 years,” Singhvi said.

Sibal, too, objected to the plea, contending, “They are seeking to alter the court’s judgment by filing an application. They think of consumers and what about the shock on our company.”

Sibal added that the discoms “badly need these funds” as the power supplier National Thermal Power Corporation (NTPC) has threatened to cancel their licences.

The bench said, “The power of prescription of RAs is vested with the regulatory commissions. That has been taken by us as the guiding principle. We were thinking how it could be worked out and so we gave timelines. But now you say 4 years is not enough.”

Mehta said, “If the shock is gradual, the effect on consumers is little. We used to give them free electricity and now you will have to pay double the bill.” He informed the court that as per the calculation made by DERC, the tariff escalation of 70-80% for BSES discoms in a four-year window could be reduced to 50-60% in a seven-year period.

The DERC contended that it was also seeking another modification for the period of liquidation of RA to begin from August instead of April 1, 2024. The application stated, “As collections are to be made prospectively, if the period for liquidation were to be directed to start retrospectively from April 1, 2024, it would create an undue hardship for the consumers, since a significant period of almost 1.5 years has already elapsed and as a result, the recovery would have to be compressed within the remaining time, resulting in a huge burden on consumers.”

Mehta said that the same judgment of August 6, in two paragraphs, noted that existing RA were to be liquidated in seven years, as per Rule 23 of Electricity Rules, 2005, as inserted by the Electricity (Amendment) Rules, 2024.

Rule 23 deals with the gap between approved Annual Revenue Requirement (ARR) and estimated annual revenue from approved tariff and envisages that any gap be liquidated in seven equal yearly instalments from the next financial year.

Mehta pointed out that despite noting this aspect, the judgment in the final paragraph notes the period of liquidation as four years, starting April 2024. “It would be extremely onerous and burdensome on the consumers of Delhi if the direction to liquidate the existing regulatory assets were to be implemented in 4 years as against 7 years permissible under the Amended Rules,” the application said.

He also pointed out that as directed in the judgment, the Appellate Tribunal for Electricity (APTEL) has initiated suo motu proceedings to implement the directions. Last Friday, the secretary of the commission was asked to be present. Mehta requested the top court to pass orders dispensing the secretary’s presence before APTEL.

The court said, “If any order is passed, you can file an appeal. Your application cannot be handled by this bench. I will have to ask my brother (judge).”

Meanwhile, the regulatory commissions of Rajasthan and Kerala also informed the court of having filed similar applications.