DERC kicks off process for intensive audit of power discoms in Delhi

Delhi's DERC has tendered for an audit of power discoms, following APTEL's directive after the Supreme Court's ruling on regulatory asset liquidation.

The Delhi Electricity Regulatory Commission (DERC) has floated a tender to appoint a Comptroller and Auditor General (CAG)-empanelled chartered accountancy (CA) firm to audit power distribution companies in the Capital, officials said.

The development comes nearly a month after the Appellate Tribunal for Electricity (APTEL) quashed the DERC’s proposal to conduct the exercise through the CAG itself. (HT archive)

The development comes nearly a month after the Appellate Tribunal for Electricity (APTEL) quashed the DERC’s proposal to conduct the exercise through the CAG itself.

According to officials, the development complies with the Supreme Court’s August 6, 2025, directions regarding the liquidation of regulatory assets accumulated by power discoms over the years. The court also directed the DERC to conduct a “strict and intensive audit” into the circumstances under which the distribution companies continued operations without recovering the regulatory assets.

A regulatory asset is unrecovered revenue that regulators allow power companies to carry forward and recover later through future tariff revisions. According to DERC’s submissions before the tribunal in January, the total outstanding regulatory assets of Delhi’s three power discoms stand at ₹38,552 crore. This has raised concerns about potential electricity tariff revisions in the Capital.

In April, 2026, the APTEL set aside the DERC’s proposal to conduct the audit through the Comptroller and Auditor General. The tribunal held that the move violated provisions of Section 20(3) of the CAG (Duties, Powers and Conditions of Service) Act, 1971.

The tribunal observed that while the Supreme Court directed an intensive audit of the discoms, it did not specify that the CAG must carry out the exercise. The APTEL also clarified that the court-mandated audit was limited to examining the circumstances that led to the accumulation of regulatory assets, not a comprehensive financial audit of the power distribution companies.

The tribunal then directed the DERC to complete the audit within three months from April 20. In an April order, the tribunal had given DERC three weeks to initiate the process for liquidating the dues.

Meanwhile, officials privy to the matter said that DERC is likely to approach the tribunal to seek additional time to begin the process linked to liquidating the regulatory assets.

According to DERC’s submissions, of the total outstanding regulatory assets of Delhi’s three power discoms, ₹19,174 crore pertains to BSES Rajdhani Power Limited, ₹12,333 crore to BSES Yamuna Power Limited and ₹7,046 crore to Tata Power Delhi Distribution Limited.

Officials privy to the matter said that regulatory assets had built up over several years because of gaps between the actual costs incurred by the discoms and the tariffs approved by the regulator, as successive tariff revisions were either deferred or only partially implemented.

The power discoms did not respond to requests for comment.