Why the Delhi Electricity Regulator Can’t Use the CAG for DISCOM Audits

Why the Delhi Electricity Regulator Can’t Use the CAG for DISCOM Audits

April 21, 2026

In a significant legal development for India’s power sector, the Appellate Tribunal for Electricity (APTEL) has set aside a decision by the Delhi Electricity Regulatory Commission (DERC) to appoint the Comptroller and Auditor General (CAG) to audit the city’s power distribution companies (DISCOMs). The Tribunal ruled that the appointment violated the CAG Act, noting that statutory safeguards—such as demonstrating public interest and allowing the DISCOMs a fair hearing—were bypassed. Instead, APTEL has directed the DERC to appoint a Chartered Accountant (CA) within one week to complete a rigorous audit within three months.

Beyond the auditing dispute, the ruling delivers a clear mandate on the liquidation of regulatory assets—the massive financial backlog created when tariffs are kept lower than the actual cost of power. APTEL rejected DERC’s request to delay this process, ordering that the recovery of approximately ₹385.52 billion in outstanding assets must begin within three weeks. The Tribunal emphasized that these assets are a sign of “regulatory failure” and that further delays only increase the ultimate financial burden on consumers.

This intervention by APTEL is part of a broader supervisory effort following a 2025 Supreme Court judgment that flagged the buildup of regulatory assets as a critical risk to the sector’s health. By setting a strict three-week deadline for recovery and dismissing the CAG audit, the Tribunal is pushing for a more standardized, transparent, and timely resolution to Delhi’s long-standing utility debt crisis.