Regulatory assets of discoms increase 88,720 crore in June: Report

Discoms' regulatory assets cumulatively increased to Rs 88,720 crore by June 30, showed government data

Discoms' regulatory assets cumulatively rose to Rs 88,720 crore by June 30, showed government data, indicating that financial woes of utilities run deeper than their outstanding dues from states, reported The Times of India on Wednesday.

While the data says the amount recognised by state regulators is Rs 88,720 crore, industry players believe it is just the tip of the iceberg and the actual amount could be in excess of Rs 1 trillion with claims tied up in legal knots at the appellate level or in higher courts, reported TOI.

Delhi's tariff regulator has recognised regulatory assets of Rs 8,954 crore for the three discoms operating in the capital, however, if the orders of appellate bodies and courts are added, the amount will be substantially higher, executives, quoted by TOI, said.

Also Read | Power shocks: Discoms need transparency

Regulatory assets are discom expenses that are recoverable in power tariff hikes.

Last year, a NITI Aayog-Rocky Mountain Institute India report said "regulatory assets create cash-flow problems for discoms, forcing them to borrow funds to cover the revenue deficit. The additional borrowing, coupled with the interest, adds to the burden of discoms".

Consumers also pay the price as regulators often levy a surcharge to cover their failure to allow tariffs to reflect costs.

Prime Minister Narendra Modi in July said outstanding dues that stretch over several months threaten the financial stability of discoms and gencos. According to the data from the power ministry, the states and the union territories (UTs) together owe Rs 1.3 trillion to discoms.