Delhi government has ordered CAG audit of power distribution companies. This step has been taken in view of the outstanding amount of Rs 38,500 crore accumulated as regulatory assets, which is to be recovered from consumers. According to the order issued by the Electricity Department of Delhi Government, the CAG of India will conduct a thorough audit of the conditions under which distribution companies (discoms) Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYP) and Tata Power Delhi Distribution Limited. (TPDDL) has been functioning without recovery of regulatory assets.
In the power sector, Regulatory Assets (RA) is a deferred cost. When a power company’s cost of supplying electricity exceeds the revenues it receives, regulators freeze these losses to protect consumers from immediate, sharp price increases. The power company is legally allowed to recover this revenue difference in the future, usually with interest.
Audit will have to be completed in three months
It has been said in the order that the audit work will have to be completed within three months from the date of receipt of the order. However, considering the scope and complexity of the audit, CAG may consider extending the time limit. Commenting on this order, BRPL spokesperson said that the case of CAG audit of Delhi’s distribution company is still pending in the courts. Since the matter is under judicial process, it would not be appropriate to comment further on it. At present no response has been received from other distribution companies in this regard. If the distribution companies do not take the legal route, it will be the first time since the privatization of power distribution in 2002 that there will be a CAG audit of a discom in Delhi. Earlier, the then AAP government’s attempt to conduct a CAG audit of the discoms was stopped by the High Court in 2015.
DERC’s side in front of APTEL
In April this year, the Appellate Tribunal for Electricity (APTEL) had rejected the Delhi Electricity Regulatory Commission’s (DERC) plea seeking CAG audit of discoms (electricity distribution companies). Instead, the tribunal directed the regulator to initiate the process of disposal of pending regulatory assets within three weeks.
According to the information presented by DERC before APTEL, the outstanding regulatory assets include Rs 19,174 crore for BRPL, Rs 12,333 crore for BYPL and Rs 7,046 crore for TPDDL. These are the expenses which were approved by the regulator for the supply of electricity. Total regulatory assets have increased to about Rs 38,500 crore as electricity tariffs have remained unchanged for more than a decade.
Transparency will come
According to the order, the Delhi Cabinet meeting chaired by Chief Minister Rekha Gupta on June 29 recommended in public interest a thorough CAG audit of the circumstances in which discoms continued to operate without recovery of regulatory assets. Power Minister Ashish Sood on Thursday said the formal order for CAG audit of discoms is a historic moment for reforms in transparency, accountability and functioning in Delhi’s power sector. He said that this is a victory for every electricity consumer and every honest taxpayer of Delhi. Sood said that the people of Delhi have every right to know how the regulatory assets worth about Rs 38,000 crore increased and who benefited from it… CAG audit will bring out the truth.
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