Can CAG audit privately run discoms? The question before Supreme Court in Delhi dispute

Supreme Court to Decide: Can CAG Audit Private Delhi Discoms?

Can CAG audit privately run discoms? The Supreme Court of India is now set to resolve this critical question in a legal dispute involving Delhi’s three private electricity distribution companies. The court has temporarily paused a government proposal to have the Comptroller and Auditor General (CAG) examine the financial records of these entities, which has sparked debate over accountability in the power sector. The dispute centers on whether the national auditor can assess the accounts of privately managed discoms, with implications for over ₹38,500 crore in accumulated power costs that consumers may soon bear.

The Conflict Over Audit Authority

Delhi’s private discoms—BSES Rajdhani Power Ltd, BSES Yamuna Power Ltd, and Tata Power Delhi Distribution Ltd—have been at the heart of this legal battle. The state government, led by Chief Minister Rekha Gupta, sought to involve the CAG in auditing their financial records, arguing that transparency is essential to ensure fair tariff revisions. However, the Appellate Tribunal for Electricity (APTEL) ruled in April that the CAG’s involvement was not permitted under the electricity distribution law, as the discoms operate as independent entities. This decision prompted the government to turn to an independent chartered accountant for the audit process.

“The CAG’s role is crucial for establishing accountability in the power sector, but the legal framework must be clear to avoid confusion.” – Senior legal expert Dr. Anupama Kaul

Despite the tribunal’s ruling, the Delhi government has since mandated a new CAG audit, calling it “strict and intensive.” This move has drawn scrutiny from the Delhi Electricity Regulatory Commission (DERC), which filed an appeal arguing that APTEL’s exclusion of the CAG was an error. The Supreme Court’s recent stay on both the APTEL-ordered audit and the government’s CAG proposal has created uncertainty, delaying the resolution of whether the national auditor can oversee these private entities.

Regulatory Assets and Consumer Impact

The core of the dispute lies in the concept of regulatory assets (RAs), which have accumulated due to the gap between electricity supply costs and customer payments. These RAs, amounting to over ₹38,500 crore, were built up over years without