SC directs liquidation of regulatory assets owed to discoms over a four-year period

On Wednesday, August 6, 2025, the Supreme Court gave a four -year deadline to liquidate states and union regions, long -standing regulatory assets or dues that owed to power distribution companies.

The decision of a bench headed by Justice PS Narasimha was based on petitions opened by three distribution companies supplying electricity to consumers in national capital, ie BSES Rajdhani Power Ltd., BSES Yamuna Power Ltd and Tata Power Delhi Distribution Limited.

The Delhi Electrical Establishment Commission has led to the creation and continuity of a “regulatory asset veren that has led to the development of obligations for decades of determining the retail electrical supply tariff over the years.

Regulatory assets are costs made by power distribution companies, which are considered to be saved from consumers in future tariffs, but are not immediately recovered on existing invoices.

“Regulatory assets are considered as assets in the balance sheet and are liquidated by tariff corrections or state subsidies for a scheduled period. The regulatory asset is a cost that the regulatory commission allowed to be postponed on the balance sheet instead of being spent immediately. The distribution company provides the“ accepting company, the company provides to obtain the company, to obtain the regulating company ‘To obtain the regulation company, to obtain the distribution company, to obtain the distribution company, to obtain the distribution company, to obtain the distribution company, to obtain, ”regulation,” regulation, ”provides the organization,”’ to obtain the regulation installation, ”distribution company, ‘to obtain focus,” distribution company, ”. Narasimha explained.

Justice Narasimha directed the liquidation of the existing, long -term dues, which has been marked as regulatory assets, within a maximum of four years from April 1 last year.

The court said that in the future, regulatory assets should be liquidated within three years.

The decision led the state regulatory commissions to provide orbit and road maps for the liquidation of existing regulatory assets.

“Regulatory commissions should conduct a strict and intensive control of the conditions in which distribution companies continue to recover the regulatory asset,” he said.

Appeal Electrical Court suo motu Monitor and follow the liquidation of the regulatory asset to the end of the prescribed period.