Pending regulatory assets worth Rs 38,500 crore: Delhi orders CAG audit of discoms

The Delhi government has ordered a Comptroller and Auditor General (CAG) audit of power discoms amid concerns over Rs 38,500 crore in regulatory assets (RAs) accumulated over the years — a cost that is ultimately to be recovered from consumers.

In an order issued on Wednesday, the Power department said that the CAG will undertake a “strict and intensive audit of the circumstances in which the Distribution Companies —BRPL, BYPL and TPDDL have continued without recovery of Regulatory Assets.”

The audit may preferably be completed within three months from the date of communication of the order, subject to such extension as the CAG may consider necessary having regard to the scope and complexity of the audit, the order dated July 1 read.

In response to the government’s decision, a BSES spokesperson said, “The question of a CAG audit of the Delhi discoms is currently sub-judice before the courts. As the matter is under judicial consideration, it would not be appropriate to comment further.”

This will be the first time power discoms in Delhi undergo a CAG audit since the privatisation of electricity distribution in 2002, unless they seek legal recourse. A similar attempt was made by the previous AAP-led government to conduct a CAG audit, but it was thwarted by the High Court in 2015.

RAs refer to deferred expenses borne by discoms out of changes in fuel costs. It is determined as the gap between average cost of supply by the discoms and the revenue collected by them through tariffs and subsidies.

“…After considering the representations of the Distribution Companies and the directions of the Supreme Court…and having regard to the magnitude of the regulatory assets, their implications on electricity consumers, the involvement of public funds through government equity participation and subsidy support, and the consequent need for transparency and accountability in the electricity sector, the Cabinet on June 29, has observed that entrustment of the audit to the CAG of India is expedient in public interest, and has accordingly recommended the entrustment of a strict and intensive audit of the circumstances in which the Distribution Companies have continued without recovery of the regulatory assets, to the CAG…,” the order read. The Cabinet meeting was chaired by Chief Minister Rekha Gupta this Monday.

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Power Minister Ashish Sood said, “The formal order for the CAG audit of Delhi’s DISCOMs is a historic moment for transparency, accountability and governance reforms in Delhi’s power sector. More importantly, it is a victory for every electricity consumer and every honest taxpayer of Delhi.”

He said that after the privatisation of the power sector, many financial decisions, special arrangements and growing liabilities escaped proper public scrutiny for years.

“The AAP government chose to protect the system instead of examining it. What they failed to do in 10 years, our government has initiated within a few months…people of Delhi have every right to know how regulatory assets worth nearly Rs 38,000 crore kept growing and who benefited while this burden continued to hang over the citizens. This CAG audit will bring out the facts,” Sood said.

“…not a single honest taxpayer of Delhi will be forced to pay for anybody’s vested interests, special favours or wrong decisions. Public money must be protected. We have followed every legal process with complete transparency, and now we expect full cooperation from all the discoms,” the minister added.

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Officials also said that the audit has been approved by Lieutenant Governor.

Earlier in April, the Appellate Tribunal for Electricity (APTEL) rejected the Delhi Electricity Regulatory Commission’s (DERC) application seeking a CAG audit of power discoms and directed the Commission to begin the liquidation of pending RAs in three weeks.

As per DERC’s submission before APTEL, the outstanding RAs comprise Rs 19,174 crore for BRPL, Rs 12,333 crore for BYPL, and Rs 7,046 crore for TPDDL. These represent approved expenditure incurred by the discoms for supplying electricity.

As there was no tariff hike in over a decade, the amount rose to Rs 38,500 crore.

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The order also states that on August 6, 2025, a strict and intensive audit of the circumstances in which the discoms continued without recovery of RAs was directed. And the CAG, through its communication on January 20 this year, conveyed its in-principle approval to undertake the audit of accounts of the three discoms, upon an authorisation issued by the LG as per relevant sections.

On APTEL rejecting a CAG audit, the Power department in its order said that notices were issued to the discoms on June 6, asking them to submit their representations and avail opportunity of personal hearing on the matter.

“The audit shall extend to all matters incidental or ancillary to, or necessary for, conducting the aforesaid audit in accordance with law,” the order read.