Discoms' regulatory assets stood at Rs 88,720 crore in June

Regulatory assets are effectively the costs that have still not been recovered by discoms but can be recovered in future

September 14, 2022 2:30 IST | India Infoline News Service
According to government statistics, Discoms' regulatory assets totaled Rs88,720 crore by June 30. This shows that the utilities' financial problems go beyond their unpaid state debt, according to a Wednesday article in The Times of India.
While data indicates that the sum recognized by state regulators is Rs88,720 crore, industry players fear that this is merely the tip of the iceberg and that the true amount may exceed Rs 1 trillion due to claims that are bogged down in legal tangles at the appeal level or in higher courts.

Regulatory assets are discom costs that can be recovered through increases in power rates. A study from the NITI Aayog and Rocky Mountain Institute India last year stated "Discoms experience cash flow issues because of regulatory assets, prompting them to take out loans to make up the difference in income. The increased borrowing increases the burden on discoms, as does the interest ".
Because regulators frequently impose a surcharge to make up for their refusal to let tariffs reflect costs, consumers also pay the price. The financial health of gencos and discoms is at risk, according to statements made by Prime Minister Narendra Modi in July regarding an unpaid debt that spans several months. The union territories (UTs) and the states collectively owe discoms Rs1.3 trillion, according to statistics from the electricity ministry.

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