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					</table><p>The <a href="http://delhihighcourt.nic.in/web/" target="_blank" rel="noopener">Delhi High Court</a> has dismissed petitions filed by Delhi&#8217;s power distribution companies (DISCOMs) challenging a notice issued by the Government of the National Capital Territory of Delhi (GNCTD) proposing that they be audited by the Comptroller and Auditor General of India (CAG).</p>
<p>The court held that the Delhi government had only issued a show-cause notice seeking the companies&#8217; response before any decision on the entrustment of the audit is taken.</p>
<p>The court observed that the notice only allowed the DISCOMs to submit their objections before any final decision on the proposed entrustment of the audit is taken. Holding that the challenge was premature, the court declined to interfere at the show-cause stage.</p>
<p><strong>Background</strong></p>
<p>In August 2025, the Supreme Court, while examining the prolonged accumulation of regulatory assets by DISCOMs across the country, directed electricity regulators to undertake a &#8220;strict and intensive audit&#8221; of the circumstances under which the utilities continued to operate without recovering the regulatory assets.</p>
<p>Following the judgment, the Delhi Electricity Regulatory Commission (DERC) approached the CAG to conduct an audit of BSES Rajdhani Power (BRPL) and BSES Yamuna Power (BYPL). The matter subsequently reached the Appellate Tribunal for Electricity (APTEL), which held that DERC&#8217;s attempt to secure a CAG audit was <a href="https://www.mercomindia.com/aptel-rules-cag-not-appropriate-body-to-audit-delhi-discoms?" target="_blank" rel="noopener">contrary</a> to the provisions of the CAG Act and directed the Commission to appoint a Chartered Accountant to undertake the audit instead.</p>
<p>DERC challenged APTEL&#8217;s orders before the Supreme Court.</p>
<p>Meanwhile, the Delhi government issued a fresh notice proposing entrustment of the audit to the CAG after granting the DISCOMs an opportunity to present their objections.</p>
<p>The BSES companies argued that the notice was contrary to the Supreme Court&#8217;s regulatory asset judgment, the Delhi High Court&#8217;s earlier judgment in the United Residents Joint Action (URJA) case, and APTEL&#8217;s orders quashing the proposed CAG audit.</p>
<p>They contended that the Supreme Court had directed an audit of the regulatory circumstances that led to the accumulation of regulatory assets, not an audit of the DISCOMs themselves. The companies also argued that the audit contemplated by the Supreme Court was effectively an examination of regulatory failures by DERC rather than a financial audit of the utilities.</p>
<p>The DISCOMs further submitted that APTEL had already set aside the proposed CAG audit and directed DERC to appoint an independent Chartered Accountant to conduct the exercise.</p>
<p>The Delhi government contended that the petition was premature because the impugned communication was only a show-cause notice and no final decision had been taken. It submitted that an independent audit was necessary in the public interest to examine the circumstances that led to the prolonged accumulation of regulatory assets, which ultimately affect electricity consumers.</p>
<p><strong>Court&#8217;s Analysis</strong></p>
<p>The High Court held that a writ petition would ordinarily not be maintainable against a show-cause notice unless the notice was issued without jurisdiction or contained a fundamental legal defect.</p>
<p>It observed that the June 6 notice merely initiated the statutory process under Section 20(3) of the CAG Act and provided the companies with an opportunity to be heard before any final decision on the entrustment of the audit is taken.</p>
<p>The court also rejected the argument that the Supreme Court&#8217;s regulatory asset judgment contemplated only an audit of DERC.</p>
<p>It held that the direction to conduct a strict and intensive audit of the circumstances in which DISCOMs continued without recovery of regulatory assets was broad enough to include examination of the companies&#8217; records, conduct, accounts, and financial position.</p>
<p>The judgment noted that the Supreme Court had not specified which agency must conduct the audit and had not barred the CAG from undertaking such an exercise, provided that the requirements of the CAG Act are satisfied.</p>
<p>The court also observed that the present process includes an opportunity for the DISCOMs to be heard before any entrustment decision is taken.</p>
<p>It held that all contentions regarding the proposed audit remain open for consideration by the competent authority during the proceedings.</p>
<p>Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don&#8217;t miss any critical updates from the renewable industry.</p>


Delhi High Court Dismisses DISCOMs’ Plea Against CAG Audit


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					</table><p>The Appellate Tribunal for Electricity (<a href="https://aptel.gov.in/en" target="_blank" rel="noopener">APTEL</a>) has set aside the Delhi Electricity Regulatory Commission&#8217;s (DERC) decision to appoint the Comptroller and Auditor General (CAG) to audit Delhi&#8217;s power distribution companies (DISCOMs), holding that the move violated statutory provisions under the CAG Act.</p>
<p>The Tribunal also rejected DERC&#8217;s request to delay the liquidation of regulatory assets and directed that recovery begin within three weeks.</p>
<p><strong>Background</strong></p>
<p>The order was issued in a suo motu proceeding under Section 121 of the Electricity Act, through which APTEL is monitoring compliance with the Supreme Court&#8217;s August 2025 <a href="https://www.mercomindia.com/supreme-court-orders-pay-dues-discoms-four-years" target="_blank" rel="noopener">judgment</a> on regulatory assets.</p>
<p>In that judgment, the apex court had flagged the buildup of regulatory assets as a sign of regulatory failure. It directed commissions to conduct a strict, intensive audit of DISCOMs and to ensure that these assets are liquidated within a defined timeline.</p>
<p>Following this, DERC initiated steps to have the Delhi DISCOMs audited by the CAG and sought the Lieutenant Governor of Delhi&#8217;s approval. At the same time, it sought an extension to defer the commencement of regulatory asset liquidation, citing the need to complete the true-up for the 2023–24 financial year.</p>
<p><strong>Tribunal&#8217;s Analysis</strong></p>
<p>APTEL held that the Supreme Court&#8217;s direction to conduct an audit did not mandate that the CAG carry out the exercise. It rejected DERC&#8217;s interpretation that a CAG audit was implied, noting that the apex court had not specified any particular auditing authority. It emphasized that regulatory commissions are free to appoint other auditors, including chartered accountants, to undertake such audits.</p>
<p>It found that DERC&#8217;s move to entrust the audit to the CAG did not comply with Section 20 of the CAG Act, which governs audits of bodies not otherwise under the CAG&#8217;s jurisdiction. It was observed that there was no material on record to demonstrate that the public-interest requirement had been properly assessed before approval was granted. It also noted that the DISCOMs were not allowed to be heard before the decision.</p>
<p>Holding that statutory safeguards had been bypassed, APTEL quashed the approval for the CAG audit and directed DERC to appoint a chartered accountant within one week to complete the audit within three months.</p>
<p>Regarding regulatory asset liquidation, the Tribunal found no justification for delaying the process. It observed that the quantum of regulatory assets, estimated at approximately ₹385.52 billion (~$4.14 billion), was already known and that their recovery was not contingent on the completion of the true-up exercise.</p>
<p>APTEL noted that continued delays would increase the burden on consumers and criticized DERC for failing to adhere to previously committed timelines. It directed the Commission to commence the liquidation process within three weeks, while allowing time until June 30, 2026, to issue the pending true-up order.</p>
<p>The Tribunal also reiterated that its supervisory jurisdiction under Section 121 empowers it to intervene where regulatory commissions fail to comply with statutory provisions, even while implementing Supreme Court directions.</p>
<p>Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don&#8217;t miss any critical updates from the renewable industry.</p>


APTEL Rules CAG Not Appropriate Body to Audit Delhi DISCOMs


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					</table><p>The Comptroller and Auditor General of India (<a href="https://cag.gov.in/en" target="_blank" rel="noopener">CAG</a>) has pulled up government-owned Coal India (<a href="https://www.coalindia.in/" target="_blank" rel="noopener">CIL</a>) for the tardy implementation of its solar energy initiatives and recommended that it ‘fast-track’ project execution to meet its Net Zero targets.</p>
<p>In its recently released compliance audit report, the CAG said CIL and its seven subsidiaries had achieved only 4.08% of the targeted 3 GW of solar capacity by the end of 2024.</p>
<p>According to Mercom India Research, CIL currently has an operational solar capacity of 208.05 MW and an additional 510 MW under development.</p>
<p>The company has set a renewable energy target of 9.5 GW by the financial year 2030. Given its performance so far, the target does not appear to be within reach.</p>
<p>In 2024, the government <a href="https://www.mercomindia.com/indian-coal-sector-targets-9-gw-renewable-2030" target="_blank" rel="noopener">issued</a> directives to coal companies to accelerate the adoption of solar power in their operations, including rooftop solar installations, and to develop solar projects in de-coaled areas and on available land.</p>
<p>Government-owned coal companies <a href="https://www.mercomindia.com/coal-ministry-green-hydrogen-pump-storage-projects" target="_blank" rel="noopener">offered</a> to make surplus land available with them for private investors interested in setting up green hydrogen and pumped storage projects.</p>
<p>According to its annual report 2024–25, CIL commissioned 114 MW of ground-mounted solar projects, including a 24 MW project at Central Coalfields, 50 MW at Mahanadi Coalfields, 20 MW at South Eastern Coalfields, and another 20 MW at Bharat Coking Coal. Rooftop solar installations across various subsidiaries contributed an additional 12.11 MW during the year.</p>
<p>The CAG report recalled that, in line with the target of 3,000 MW of solar power by 2024, CIL had set up joint ventures with NTPC and NLC India to develop a total capacity of 2,000 MW. It had also formed a special purpose vehicle for project execution.</p>
<p>However, work orders had been issued only for 692.50 MW of ground-mounted solar projects and 34.56 MW of rooftop projects until December 2024, with anticipated commissioning by 2027-28.</p>
<p>The Ministry of New and Renewable Energy (MNRE) stated that CIL also planned to add 158 MW of solar capacity by 2025-26, and it would explore floating solar projects at abandoned mines and stabilized overburden dumps in the company’s subsidiaries. “However, the Ministry had remained silent about the progress of the work,” the CAG said.</p>
<p><strong>Execution Challenges</strong></p>
<p>The CIL management attributed the slow progress to solar supply chain disruptions post-COVID and to the blanket time extension granted by MNRE until March 2024. It also stated that other public sector enterprises were similarly affected by the pandemic.</p>
<p>In its annual report, CIL said it faces several challenges in scaling up its solar initiatives. Right-of-way issues for transmission line corridors remain a persistent obstacle, complicating power evacuation. Delays in obtaining regulatory clearances further impact project timelines.</p>
<p>According to the company, integrating solar projects into active mining areas poses unique engineering and safety challenges, while volatile global solar module prices and high initial capital requirements add financial risk. Securing long-term power purchase agreements remains a critical hurdle, complicated by market pricing volatility, regulatory delays in tariff approvals, and limited grid connectivity options.</p>
<p>In its audit of Bharat Heavy Electricals (BHEL), another public sector enterprise, the CAG said the technology used in the company&#8217;s manufacturing facilities had become outdated. Its 85 MW solar cell and 200 MW module have minimal utilization due to limited raw material availability. The module line cannot be further upgraded.</p>
<p>It said BHEL must explore the possibility of creating new facilities or upgrading existing ones with modern technology, as per market demand/conditions.</p>
<p>Regarding the performance of its solar engineering, procurement, and construction business, the CAG said BHEL must analyze its execution experience and market presence to decide on investment for future expansion.</p>


CAG Pulls Up Coal India for Tardy Implementation of Solar Projects

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