Letter written to Principal Accountant for audit of discom regulatory assets: TNERC

The Tamil Nadu Electricity Regulatory Commission (TNERC) said a letter has been written to the Accountant General, Chennai, seeking appointment of an audit party to conduct intensified audit of the conditions that led to the continuation of power distribution companies without recovering regulatory assets.

Costs incurred by energy distribution companies that cannot be covered on time lead to regulatory assets (RA).

The Supreme Court had issued broader directions to all State Electricity Regulatory Commissions (SERCs) mandating the liquidation of old RAs within four years. The top court limited the creation of new RAs to 3% of the Annual Revenue Requirement (ARR). It directed the Electricity Appellate Tribunal (Aptel) to monitor the implementation of creation and liquidation of RAs and ensure accountability.

According to TNERC’s petition to Aptel, the regulatory assets of State power utilities were ₹ 83,000 crore.

It was stated that the state government has issued an order to restructure and bifurcate the Tamil Nadu Generation and Distribution Company Limited (Tangedco) for the formation of three companies namely Tamil Nadu Power Generation Company Limited (TNPGCL), Tamil Nadu Green Energy Corporation Limited (TNGECL) and Tamil Nadu Power Distribution Company Limited (TNPDCL).

TNERC said regulatory assets measured at ₹ 83,000 crore have been allocated to new companies – TNPGCL @ – 27% – i.e. ₹ 22,110.16 crore, TNGECL@- 2% – ₹ 1,851.71 crore allocated and TNPPDCL @ -71% – ₹ 59,038 crore allocated.

TNERC also said that it is in talks with the state government and TNPDCL regarding liquidation of regulatory assets within the time fixed by the Supreme Court. It was stated that once the plan for divestment of the Regulatory asset of ₹ 59,038 crore related to TNPDCL is completed by the state government and the Administration, the roadmap/trajectory will be presented.

TNERC said a letter has been sent to the Accountant General, Chennai, seeking their assistance in appointing an audit party to undertake the audit of the issuance of regulatory assets and submit the audit report bound to a specific time period.

TNERC said that intensive consultations with the state government and the electricity distribution company are continuing and asked for time to be given to solve the problem.

As per rating firm ICRA’s estimate, RA position at the all-India level remains high at ₹3 lakh crore, driven mainly by Tamil Nadu, Uttar Pradesh, Rajasthan, Maharashtra, Delhi, West Bengal and Karnataka.