DERC Pivots to Private Auditors for Enforcement Sale Verification Following APTEL Setback

The Delhi Electricity Regulatory Commission (DERC) has formally invited bids from Comptroller and Auditor General (C&AG) empanelled firms to undertake the verification, reconciliation, and finalization of enforcement sales for the city’s primary distribution companies (DISCOMs). This move signifies a strategic shift for the regulator after the Appellate Tribunal for Electricity (APTEL), in a high-impact ruling on April 20, 2026, quashed DERC’s previous attempt to initiate a direct audit by the CAG itself. The Tribunal held that a direct CAG-led audit was “not legally sustainable” under the CAG Act and directed the appointment of private chartered accountants to fulfill the mandate.

This “strict and intensive” audit—covering BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Limited (BYPL)—is a critical prerequisite for liquidating a staggering regulatory asset buildup, currently estimated at over ₹38,500 crore. The verification process follows the methodology mandated by the Hon’ble Supreme Court in its judgment dated October 18, 2022, regarding the treatment of energy in theft and enforcement cases.

Core Audit Parameters and Subject Entities

The appointed consultants will be tasked with a massive data reconciliation project spanning 17 financial years. The scale of the assignment is defined by the following parameters:

• Target DISCOMs: BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Limited (BYPL).
• Audit Period: Financial Year (FY) 2007-08 to FY 2023-24.
• Case Volume: A total of approximately 403,314 enforcement cases, comprising 274,786 for BRPL and 128,528 for BYPL.
• Data Complexity: Verification will require auditing data across multiple platforms, including modern SAP systems and “pre-SAP” legacy billing engines used during the earlier years of the audit period.

Legal and Statutory Basis

The tender is rooted in the Supreme Court’s 2022 ruling, which established that “Assessed Energy” must be accounted for as energy supplied to ensure the commercial integrity of Aggregate Technical and Commercial (AT&C) loss calculations. The audit must comply with the Electricity Act, 2003, and the DERC (Supply Code and Performance Standards) Regulations of 2007 and 2017.

Central to the audit is the verification of the LDHF Formula (Connected Load x Days x Supply Hours x Load Factor), the technical standard used to assess energy in theft cases. Bidders must scrutinize whether this formula was applied correctly at the field level and if the resulting units were accurately reflected in the DISCOMs’ books.

Key Procurement Milestones

Bidder Eligibility and Personnel Requirements

Firms must be empanelled with the C&AG for FY 2025-26 and demonstrate a minimum average annual turnover of ₹1.50 Crore over the last three financial years (FY 2022-23 to FY 2024-25).

A critical compliance hurdle is the Conflict of Interest clause; bidders are disqualified if they share legal representatives with other bidders or have ongoing assignments with the Commission that overlap in manpower. The mandatory team composition includes:

• Team Leader: B.Tech/BE with 10+ years of relevant post-qualification experience.
• Team Members (Engineer): At least two (2) Graduate Engineers (B.Tech/BE) with a minimum of 5 years of experience.
• CISA/DISA Member: Certified Information Systems Auditor with 3+ years of experience.
• SAP Expert: Professional with 3+ years of experience in SAP system environments.
• Finance Member: Qualified Chartered/Cost Accountant with 5+ years of post-qualification experience.

Functional Scope of Work

The consultants are required to verify the integrity of “Assessed Energy” from the point of field inspection to the final ledger entry. Primary responsibilities include:

1. FIR Verification: Validating Field Inspection Reports against Electricity Act standards and the LDHF assessment formula.
2. System Reconciliation: Cross-referencing assessed energy in bills against SAP entries, True-up Petitions, and Annual Audited Books of Account.
3. Settlement Audits: Verifying payments settled via Lok Adalats or other competent authorities to ensure final settlements (often involving monetary discounts) do not incorrectly reduce the “units of energy” actually supplied.
4. Data Categorization: Consumer Account (CA)-wise and Category-wise finalization of data for the full 17-year duration.

Contractual Terms and Milestones

Successful bidders must provide a Performance Bank Guarantee (5% of contract value) and sign a Data Privacy Pact with the respective DISCOM within 7 days of the contract. The reporting schedule is tight, reflecting judicial pressure to liquidate regulatory assets: a Draft Report is due within 90 days of the Letter of Award (LoA), and the Final Report within 120 days.

Payment Structure:

• 10% Mobilization Advance: Against a 110% bank guarantee upon LoA acceptance.
• 50% of Contract Value: Upon submission of the Draft Report following interaction with the Commission.
• 40% of Contract Value: Upon submission and acceptance of the consolidated Final Report.