Supreme Court orders states to clear Rs 1.5 lakh crore Discom dues

Electricity tariffs are likely to increase across India following a Supreme Court order directing all states and Union Territories to recover pending dues owed to power distribution companies over the next four years.

These liabilities, known as regulatory assets, have accumulated to over ₹1.5 lakh crore. They stem from the gap between actual electricity supply costs and the lower tariffs approved by state regulators. To keep tariffs low, payments to distribution companies were deferred over the years, resulting in growing interest burdens.

A bench of Justices P S Narasimha and Atul S Chandurkar asked all State Electricity Regulatory Commissions to submit time-bound plans for recovering these amounts. The Appellate Tribunal for Electricity (APTEL) has been directed to oversee the implementation of the court’s order.

The court criticised regulatory bodies and APTEL for their failure to control the unchecked accumulation of these dues, stating that this inefficiency directly burdens consumers.

The case originated with petitions from Delhi-based Discoms, but the court extended the scope to cover all states. The bench reiterated that while regulators have sufficient authority under the Electricity Act to manage such issues, these powers have not been effectively used.

Advocate Shri Venkatesh, appearing for Tata Power Delhi Distribution Ltd., noted that several commissions and state governments had allowed regulatory assets to accumulate over the years. The court has now ordered these to be cleared within a four-year timeframe.

The order also calls for regulators to consider options that could decouple regulatory asset recovery from consumer tariffs, if practical. While some increase in tariffs is expected, the court stressed that any rise should remain within reasonable limits.

The Delhi Electricity Regulatory Commission and other state bodies are now required to file detailed recovery plans under the supervision of APTEL.