+
Supreme Court Sets Rules on Regulatory Asset Recovery
ECONOMY & POLICY

Supreme Court Sets Rules on Regulatory Asset Recovery

The Hon’ble Supreme Court of India has, on 6 August 2025, pronounced its judgment and disposed of the Writ Petitions and Civil Appeals filed in 2014 by BSES Yamuna Power Limited and BSES Rajdhani Power Limited—both material subsidiaries of the company—regarding the recovery of Regulatory Assets.

The petitions challenged non-cost-reflective tariffs, the unlawful creation of Regulatory Assets, and the delay in their liquidation. After extensive hearings involving State Governments and State Electricity Regulatory Commissions, the Court had reserved judgment on 20 February 2025.

In its final ruling, the Court laid out ten principles (‘sutras’) and issued nine binding directions for Electricity Regulatory Commissions (ERCs) and the Appellate Tribunal for Electricity (APTEL), aiming to ensure accountability, transparency, and timely recovery in tariff regulation.

Key directives include:

Tariffs must be cost-reflective as a primary principle.
Regulatory Assets may only be created in exceptional situations, and must not exceed a reasonable percentage—guided by 

  • Rule 23 of the Electricity Rules, 2005, which suggests a cap of 3 per cent of the Aggregate Revenue Requirement (ARR).
  • Once created, a Regulatory Asset must be liquidated within three years; existing assets must be cleared by 1 April 2028, following a four-year roadmap from 1 April 2024.
  • ERCs must define a clear recovery roadmap and conduct strict audits of continued non-recovery.
  • APTEL is tasked with ensuring oversight, issuing directions under Section 121, and registering a suo moto petition to monitor compliance.

In compliance with the ruling, the Regulatory Asset approved by the Delhi Electricity Regulatory Commission (DERC) will be fully liquidated within four years from 1 April 2024, as mandated.

The Hon’ble Supreme Court of India has, on 6 August 2025, pronounced its judgment and disposed of the Writ Petitions and Civil Appeals filed in 2014 by BSES Yamuna Power Limited and BSES Rajdhani Power Limited—both material subsidiaries of the company—regarding the recovery of Regulatory Assets.The petitions challenged non-cost-reflective tariffs, the unlawful creation of Regulatory Assets, and the delay in their liquidation. After extensive hearings involving State Governments and State Electricity Regulatory Commissions, the Court had reserved judgment on 20 February 2025.In its final ruling, the Court laid out ten principles (‘sutras’) and issued nine binding directions for Electricity Regulatory Commissions (ERCs) and the Appellate Tribunal for Electricity (APTEL), aiming to ensure accountability, transparency, and timely recovery in tariff regulation.Key directives include:Tariffs must be cost-reflective as a primary principle.Regulatory Assets may only be created in exceptional situations, and must not exceed a reasonable percentage—guided by Rule 23 of the Electricity Rules, 2005, which suggests a cap of 3 per cent of the Aggregate Revenue Requirement (ARR).Once created, a Regulatory Asset must be liquidated within three years; existing assets must be cleared by 1 April 2028, following a four-year roadmap from 1 April 2024.ERCs must define a clear recovery roadmap and conduct strict audits of continued non-recovery.APTEL is tasked with ensuring oversight, issuing directions under Section 121, and registering a suo moto petition to monitor compliance.In compliance with the ruling, the Regulatory Asset approved by the Delhi Electricity Regulatory Commission (DERC) will be fully liquidated within four years from 1 April 2024, as mandated.

Related Stories

Gold Stories

Next Story
Infrastructure Urban

NABARD Holds Seminar on Vigilance, Integrity and Good Governance

National Bank for Agriculture and Rural Development (NABARD) organised a seminar on “Vigilance: Strengthening Integrity and Good Governance” on 25 August 2026 at its Head Office in Mumbai as part of the ongoing Vigilance Awareness Campaign 2026 being observed from 17 August to 16 November 2026, with the theme “Probity for Prosperity."" The seminar was graced by Suresh N Patel, Former Central Vigilance Commissioner, Government of India, as the chief guest and keynote speaker.  The programme was attended by G S Rawat, Deputy Managing Director, Dr Ajay K Sood, Deputy Managing Dire..

Next Story
Equipment

XCMG Unveils World's First 14,000-Ton Ring Crane for Heavy Lifting

XCMG has announced that the first main unit of the world's first 14,000-ton ring crane has rolled off the production line, marking a historic breakthrough in ultra-heavy lifting technology. Jointly developed by XCMG and Sinopec Heavy Lifting & Transportation Co., Ltd., the crane will be the largest-capacity ring crane ever built, setting a new benchmark for major construction projects worldwide.The crane features a modular configuration comprising two main units that work in tandem. The first main unit has completed final assembly and can independently perform lifting operations. Once both..

Next Story
Infrastructure Urban

Thriveni Logistics orders 200 tip trailers from Jagdamba trailers

Jagdamba Trailers (JTPL), one of India’s growing trailer manufacturers, has secured a significant order for 200 Tip Trailers from Thriveni Transport and Logistics Pvt. Ltd., a leading mining and logistics company serving operations across India and overseas.The order, placed for iron ore transportation, is a major milestone for JTPL, particularly as the company secured the business after competing with more than 10 established trailer manufacturers. It also strengthens an already successful relationship between the two companies. Approximately one and a half years ago, Thriveni Transport and..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code