APTEL Sets Aside INR 119.98 Crore Depreciation Disallowance Against Bihar Transmission Utility

The Appellate Tribunal for Electricity (APTEL) has set aside the disallowance of 25% of depreciation claimed by Bihar State Power Transmission Company Limited (BSPTCL), ruling that the Bihar Electricity Regulatory Commission (BERC) cannot impose financial deductions during tariff determination without specific regulatory provisions authorising such action. The Tribunal has remanded the matter to the State Commission, directing it to restore the deducted depreciation, make consequential adjustments and issue a fresh order within two months.

The judgment was delivered in Appeal No. 329 of 2025, which challenged the Commission’s decision to reduce allowable depreciation by Rs. 119.98 crore because the transmission utility had not submitted a certified Fixed Asset Register (FAR) along with its tariff petition.

The dispute originated from the Commission’s order approving the truing-up of tariff for FY 2023-24, the Annual Performance Review for FY 2024-25 and the Multi Year Aggregate Revenue Requirement for FY 2025-26 to FY 2027-28. While examining the utility’s submissions, BERC disallowed 25% of the allowable depreciation, citing the absence of a certified asset register.

BSPTCL challenged the decision before APTEL, arguing that the applicable Multi Year Transmission Tariff Regulations did not provide for reducing depreciation as a consequence of failing to submit the certified register. The company contended that the deduction effectively amounted to a penalty imposed without any specific legal authority under the tariff regulations.

The transmission utility also submitted that it had been making genuine and continuous efforts to prepare the required asset register. The exercise was being undertaken through a centralised initiative led by Bihar State Power Holding Company Limited, with completion targeted by September 2027. The appellant maintained that the ongoing process should not result in an unauthorised reduction in its depreciation allowance.

Defending its decision, BERC argued that submission of a certified Fixed Asset Register was necessary to verify asset lifespans, capitalisation details and the calculation of return on equity. According to the Commission, the absence of the register affected its ability to independently examine the utility’s asset-related claims. It also stated that the 25% deduction was a lenient measure compared with initiating more stringent proceedings under Section 142 of the Electricity Act, 2003.

After examining the submissions and applicable regulations, the Tribunal observed that although the regulatory framework requires utilities to submit a certified Fixed Asset Register, it does not expressly authorise the disallowance of depreciation solely because the document has not been provided. The bench emphasised that regulatory commissions must exercise their powers within the limits established by law.

The Tribunal further observed that statutory penalty provisions cannot be bypassed by introducing ad hoc financial deductions during tariff proceedings. It reiterated that tariff determination cannot be used as an alternative mechanism for imposing penalties without legal authority.

Accordingly, APTEL set aside the portion of the Commission’s order disallowing 25% of depreciation. The matter has been remanded to BERC to restore the deducted amount, undertake the necessary consequential adjustments and pass a fresh order within two months, bringing the depreciation dispute back before the State Commission for reconsideration.