Electricity users across India may soon see a rise in their power bills. The Supreme Court has directed all states and Union Territories to pay their long-pending electricity dues, known as "regulatory assets", within four years. These dues have built up over many years and now total over ₹1.5 lakh crore.

A bench of Justices PS Narasimha and Atul S Chandurkar gave this strong order on Wednesday. They asked State Electricity Regulatory Commissions (SERCs) to make a proper, time-bound plan to recover these dues. The court also directed the Appellate Tribunal for Electricity (APTEL) to monitor and supervise the progress of this plan.

The court criticised the electricity commissions and even APTEL for not controlling the growing problem of these dues. The judges said, "Disproportionate increase in long-pending regulatory assets ultimately puts burden on the consumer," and warned that "inefficient and improper functioning of the Commission and acting under dictation can lead to regulatory failure."

What are regulatory assets?

Regulatory assets are the difference between what it costs DisComs (power distribution companies) to supply electricity and the lower prices set by state regulators. To keep electricity affordable for consumers, regulators often postpone payments that DisComs should receive. But these unpaid amounts keep growing over time and collect interest, creating a big financial problem.

This case started with complaints from power companies in Delhi, but the Supreme Court expanded it to include all states with such pending dues.

Senior advocate Shri Venkatesh, representing Tata Power Delhi Distribution Ltd, said, "For years various commissions and state governments, due to lack of political will, allowed the regulatory assets to grow. The SC has now ordered that all such dues must be amortised over four years."

Tariff hikes coming, but gradually

The Supreme Court agreed that electricity tariffs (prices) will need to go up to cover these dues. However, the judges said the "tariff increase must be reasonable" and also warned that "regulatory assets should not exceed statutory percentage" in the future.

One lawyer involved in the case told India Today TV that the decision might actually benefit people in the long run. The lawyer said, "This was a ticking time bomb. Now, with a fixed four-year window, the cost will be distributed gradually. It's not like tariffs will jump overnight from ₹2 to ₹4 per unit. The increase will be marginal and shared across all categories: domestic, commercial, and industrial."

To reduce the impact on consumers, the Supreme Court has also asked if it’s possible to separate the recovery of these dues from electricity tariffs.

Now, the Delhi Electricity Regulatory Commission (DERC) and all other state commissions must send their action plans for how they will follow the court’s order. These plans will be checked by APTEL, as India moves towards one of the biggest changes in its power billing system in years.

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