A recent judgement of the Appellate Tribunal for Electricity (APTEL) relating to the liquidation of ‘regulatory assets’ is a wakeup call for electricity distribution companies (discoms) and the electricity regulatory commissions of various states. A ‘regulatory asset’ is an unrecovered cost that regulators have allowed discoms to carry forward, on the understanding that it would be recovered by raising tariffs.

On August 6, 2025, the Supreme Court ordered discoms to liquidate all regulatory assets within four years; it later extended the deadline to seven years. Against this backdrop, APTEL passed a suo motu order while considering whether the Delhi Electricity Regulatory Commission (DERC) could ask the Comptroller and Auditor General of India (CAG) to audit the accounts of discoms in Delhi.

While determining that the CAG audit of the Delhi discoms was not warranted, APTEL found the “conduct of DERC to be malafide and needs to be deprecated”.

APTEL’s officiating Chairperson Seema Gupta and judicial member Virender Bhat found it “evident” that DERC had been delaying the liquidation of regulatory assets“for one reason or the other”.

This, they said, permitted an increase in regulatory assets day by day, placing “additional burden upon the end-consumer of electricity in Delhi”. Gupta and Bhat also stressed that there was no “cogent and plausible reason” that prevented DERC from commencing liquidation of regulatory assets. “The commission has been holding back its hands on the regulatory assets despite giving repeated undertakings and assurances in this regard to the Supreme Court, to the Delhi High Court and to this tribunal,” they said.

They further directed DERC to begin the liquidation of regulatory assets within three weeks, even as they rejected the commission’s request for extension of time till July 1 as “totally unreasonable and unacceptable”. The central message is that regulators cannot keep tariffs artificially low by endlessly postponing recovery. Discoms are estimated to be sitting on regulatory assets of ₹3 lakh crore, with Tamil Nadu, Rajasthan, Delhi, Maharashtra and Kerala accounting for half of it.

Battery energy storage systems vs transmission

In what might seem to be an indication of the shape of things to come, members of the National Committee on Transmission (NCT) have veered towards the opinion that instead of building a new substation at Bikaner (Bikaner V) to evacuate 6 GW of renewable energy, a better option may be to ask renewable energy generators to include battery energy storage systems (BESS) in their projects.

Connectivity for evacuation of power could then be given at the existing four substations during non-solar hours.

A strong votary of this approach was SR Narasimhan, expert member of NCT and a former chairman and managing director of Grid Controller of India Ltd, who felt that “the entire AC transmission system could be completely avoided”.

The minutes of the NCT meeting show that Narasimhan had said that a detailed cost analysis indicated that the BESS-based approach is “more economical than the conventional AC transmission system, even after accounting for battery replacement costs”.

Further, BESS would improve grid stability by providing fast frequency response and allows for additional revenue through energy arbitrage (or providing storage services to others).

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Published on April 27, 2026