A recent ruling by the Appellate Tribunal for Electricity (APTEL) regarding the liquidation of ‘regulatory assets’ serves as an urgent reminder for electricity distribution companies (discoms) and state electricity regulatory commissions. Regulatory assets refer to unrecovered costs that regulators permit discoms to accumulate, with the expectation that recovery will occur through increased tariffs.
On August 6, 2025, the Supreme Court mandated that discoms must liquidate all regulatory assets within four years, a deadline that was subsequently extended to seven years. In light of this, APTEL issued a suo motu order to assess whether the Delhi Electricity Regulatory Commission (DERC) could request an audit of the accounts of discoms in Delhi by the Comptroller and Auditor General of India (CAG).
While ruling that a CAG audit of the Delhi discoms was unnecessary, APTEL commented on the “malafide conduct” of DERC, indicating a need for disapproval. APTEL’s officiating Chairperson Seema Gupta and judicial member Virender Bhat noted that DERC had been procrastinating the liquidation of regulatory assets, which led to a daily increase in these assets and subsequently imposed an additional financial burden on consumers in Delhi.
The tribunal emphasized that there was no reasonable justification for DERC’s delay in progressing towards the liquidation of regulatory assets, highlighting that the commission had repeatedly assured the Supreme Court, the Delhi High Court, and APTEL that it would commence the liquidation process. APTEL directed DERC to initiate the liquidation of regulatory assets within three weeks, dismissing DERC’s request for an extended deadline until July 1 as “totally unreasonable and unacceptable.” The overarching message underscores that regulators cannot maintain artificially low tariffs by continuously deferring asset recovery. Discoms are reported to hold regulatory assets totaling ₹3 lakh crore, with Tamil Nadu, Rajasthan, Delhi, Maharashtra, and Kerala contributing to half of this figure.
In a potentially pivotal development, members of the National Committee on Transmission (NCT) have begun to favor the idea of integrating battery energy storage systems (BESS) into renewable energy projects, rather than constructing a new substation at Bikaner (Bikaner V) to facilitate the evacuation of 6 GW of renewable energy. By recommending that renewable energy generators incorporate BESS in their projects, connectivity for power evacuation could be provided at four existing substations during non-solar hours.
SR Narasimhan, an expert member of NCT and former chairman and managing director of Grid Controller of India Ltd, advocated for this approach, asserting that it could potentially eliminate the need for the entire AC transmission system. Minutes from the NCT meeting reveal that Narasimhan noted a detailed cost analysis suggesting that the BESS option is “more economical than the conventional AC transmission system, even after accounting for battery replacement costs.” Additionally, BESS is expected to enhance grid stability through quick frequency response and generate extra revenue through energy arbitrage or by providing storage services to other entities.
Published on April 27, 2026.
