CM Rekha Gupta-led Delhi government on Wednesday directed the Comptroller and Auditor General (CAG) to conduct an audit of the capital’s power distribution companies amid concerns over regulatory assets (RA) worth nearly ₹38,500 crore that have built-up over the years and are ultimately meant to be recovered from electricity consumers.
This comes after the Delhi High Court on June 22 declined to intervene in the Delhi government’s decision to have the CAG audit the accounts of BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL). Dismissing a petition filed by the two power distribution companies, a vacation bench of Justice Tejas Karia observed that their challenge was premature at this stage. Following the ruling, Delhi Power Minister Ashish Sood welcomed the High Court’s decision.
According to an order issued by the Delhi Power Department, the CAG will carry out a comprehensive and rigorous audit to examine why the city’s three power discoms—BRPL, BYPL and Tata Power Delhi Distribution (TPDDL)—have continued operating without recovering the mounting regulatory assets, reported PTI.
The order states that the audit should ideally be completed within three months of its communication, although the CAG may grant additional time depending on the scope and complexity of the exercise.
According to the order, the audit is expected to be completed within three months from the date it is communicated, although the CAG may extend the timeline depending on the scope and complexity of the exercise.
“The question of a CAG audit of the Delhi discoms is currently sub judice before the courts. As the matter is under judicial consideration, it would not be appropriate to comment further,” a BRPL spokesperson stated.
There was no immediate response from the other power distribution companies.
If the discoms do not pursue further legal action, this will mark the first CAG audit of Delhi’s electricity distribution companies since the sector was privatized in 2002. A previous attempt by the former AAP government to subject the discoms to a CAG audit was blocked by the Delhi High Court in 2015.
Regulatory assets (RAs) are deferred costs incurred by power distribution companies due to fluctuations in fuel prices. They represent the difference between the average cost of supplying electricity and the revenue discoms recover through consumer tariffs and government subsidies.
The outstanding regulatory assets, estimated at ₹38,500 crore and owed to BRPL, BYPL and TPDDL, are reportedly recovered through a regulatory assets surcharge included in consumers’ electricity bills.
According to the order, the Delhi cabinet, at its June 29 meeting, approved a recommendation in the public interest for a “strict and intensive” CAG audit to examine why the power distribution companies have continued to carry these unrecovered regulatory assets.
The Power Department’s order authorising the audit has received the approval of the Lieutenant Governor of Delhi.
DERC’s submission before APTEL
Earlier this year, in April, the Appellate Tribunal for Electricity (APTEL) dismissed an application by the Delhi Electricity Regulatory Commission (DERC) seeking a CAG audit of the discoms. Instead, it directed the regulator to begin the liquidation of the pending regulatory assets within three weeks.
According to the DERC’s submission before APTEL, the outstanding regulatory assets comprise ₹19,174 crore for BRPL, ₹12,333 crore for BYPL, and ₹7,046 crore for TPDDL. These represent expenditures reportedly approved by the regulator for supplying electricity.
The cumulative regulatory assets have risen to around ₹38,500 crore because electricity tariffs have remained unchanged for more than a decade.
As per the Power Department’s order, the Supreme Court, in its August 6, 2025 ruling, called for a strict and comprehensive audit into the circumstances under which the power distribution companies continued to accumulate regulatory assets without recovering them.
The order further stated that the Comptroller and Auditor General (CAG), through a communication dated January 20 this year, had granted in-principle approval to audit the accounts of the three discoms, subject to authorisation by the Lieutenant Governor of Delhi under Section 20(1) of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971.
Addressing the Appellate Tribunal for Electricity’s (APTEL) earlier decision rejecting a CAG audit, the order noted that notices were issued to the discoms on June 6 in accordance with Section 20(3) of the Act, inviting them to submit their representations and appear for a personal hearing.
It added that the representations submitted by the discoms were examined in accordance with the law, and the matter was subsequently considered by the Delhi Cabinet at a meeting chaired by CM Gupta.
What did Sood say on order for the audit?
Welcoming the formal order for the audit on Thursday, Sood described it as a “historic moment for transparency, accountability and governance reforms” in the capital’s power sector.
Calling the move a major milestone, Sood mentioned it represented a victory for every electricity consumer and every honest taxpayer in Delhi.
“The people of Delhi have every right to know how regulatory assets worth nearly ₹38,000 crore kept growing and who benefited while this burden continued to hang over them. This CAG audit will bring out the facts,” Sood asserted.
Sood said no honest taxpayer in Delhi should have to bear the cost of anyone’s “vested interests, special favours or wrong decisions,” adding that every rupee of public money must be safeguarded.
Sood said that for years following the privatisation of electricity distribution, several financial decisions, special arrangements and rising liabilities were not subjected to adequate public scrutiny. He alleged that “The previous AAP government chose to protect the system instead of examining it. What they failed to do in ten years, our Government has initiated within a few months.”
