By Somit Dasgupta, Senior visiting fellow, ICRIER

In a landmark judgment delivered on August 6, the apex court has ordered clear-cut guidelines on the creation and amortisation of regulatory assets (RAs). What are RAs? When an electricity distribution company ( discom ) is unable to meet its full liabilities, which could be on account of various reasons, the electricity commission allows it to borrow the deficit amount from the market and the cost of this borrowing is included as one of the components while calculating the retail tariff.

Most of the times, the discoms are unable to finance their own expenditure because the retail tariff determined by the regulatory commissions are lower than what it should be. Keeping tariffs artificially low and allowing RAs to be created is somethi

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