SC orders DISCOMs to clear their regulatory assets | Explained

The Supreme Court recently directed the State Electricity Regulatory Commissions (SERCs) and distribution companies (DISCOMs) to clear the existing regulatory assets within four years and liquidate any new assets within three years. The court also advised capping the regulatory asset at 3% of a DISCOM’s Annual Revenue Requirement (ARR) and instructed regulators to set out transparent roadmaps for recovery, along with conducting intensive audits of DISCOMs that continue without recovering these assets.

Regulatory assets aren’t the result of deliberate inaction by a single entity but a reflection of the broader challenges of balancing affordability, subsidy dependence, and cost recovery in India’s electricity sector. Consumers, governments, regulators, and DISCOMs are all part of the ecosystem in which these gaps arise.

The Supreme Court’s intervention is therefore a call for coordinated action and greater financial discipline across the sector, so that electricity remains both affordable for households and sustainable for utilities.

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