In that matter, the Supreme Court found that regulatory assets had accumulated to over ₹1.5 lakh crore across the country, including nearly ₹27,200 crore in Delhi.
To address the issue, the Court directed electricity regulatory commissions across the country to ensure tariffs remained broadly cost-reflective, prescribed timelines for liquidation of regulatory assets and laid down a roadmap to prevent fresh accumulation.
However, while directing that such an audit be carried out, the Supreme Court did not specify who should conduct it.
Acting on the Supreme Court’s directions, the Lieutenant Governor of Delhi approved a proposal on March 5, 2026 for the audit to be conducted by the CAG.
DERC’s review petitions were later dismissed, prompting the present appeals before the Supreme Court.
The August 2025 judgment arose from a batch of cases concerning tariff orders issued by DERC between 2011 and 2014.
In that matter, the Supreme Court found that regulatory assets had accumulated to over ₹1.5 lakh crore across the country, including nearly ₹27,200 crore in Delhi. It observed that allowing such liabilities to pile up indefinitely distorted tariff determination and unfairly shifted the burden onto future consumers.
To address the issue, the Court directed electricity regulatory commissions across the country to ensure tariffs remained broadly cost-reflective, prescribed timelines for liquidation of regulatory assets and laid down a roadmap to prevent fresh accumulation.
As part of those directions, the apex court also required regulatory commissions to undertake a strict and intensive audit into the circumstances in which distribution companies had continued without recovering regulatory assets. It further directed APTEL to monitor compliance by exercising its powers under Section 121 of the Electricity Act.
However, while directing that such an audit be carried out, the Supreme Court did not specify who should conduct it.
Acting on the Supreme Court’s directions, the Lieutenant Governor of Delhi approved a proposal on March 5, 2026 for the audit to be conducted by the CAG.
This move was challenged before APTEL, which held that DERC’s decision to entrust the audit to the CAG was contrary to the statutory scheme. The Tribunal quashed the proposal and instead directed DERC to appoint an independent Chartered Accountant within one week to carry out the exercise.
DERC’s review petitions were later dismissed, prompting the present appeals before the Supreme Court.
