New system loss cap out in Q4 — ERC

by Alena Mae S. Flores – May 23, 2017 at 07:46 pm

from Manila Standard Today

The Energy Regulatory Commission is optimistic on the release of a new system loss cap, or the allowable level of system loss for distribution utilities and electric cooperatives, by the last quarter of the year.

ERC spokesman Floresinda Digal told reporters the agency’s consultant PowerSolv had released the system loss cap proposal two weeks ago.

“Before we can implement a new rule to set a new cap and implementation mechanism, we need to undergo pubcon (public consultations),” Digal said.

She said public hearings would begin in June with the target of finalizing the rules set by the fourth quarter.

Digal said Republic Act 7832 (or Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994) recognizes technical losses in the power sector.

“By nature, electricity encounters technical losses. There are non-technical losses, there is pilferage,” she said.

System loss refers to the power lost due to technical and non-technical system factors. It is part of the distribution utilities and electric cooperatives performance metrics, and is regularly monitored by the ERC.

Digal said the consultant’s proposal segregated technical from non-technical losses and recommended a non-technical system loss cap of 4.5 percent for electric coops and 1.25 percent for private distribution utilities.

She said the consultant also proposed a technical system loss cap of 2.5 percent to 7 percent.

“We’re trying to improve it on the basis of what should be recoverable considering the capex that we authorized them to use to bring down their system loss,” the official said.

The ERC during the term of former chairman Zenaida Ducut reduced the system loss caps to its current level of 8.5 percent for distribution utilities from 9.5 percent and 10 percent for electric cooperatives from 14 percent.

Energy Secretary Alfonso Cusi earlier said he would look at ways how to bring down power costs, including reducing systems loss charges.

“We have to exert more effort to reduce systems loss in order to lessen the cost of delivery of power to electricity consumers,” he said.

Sen. Sherwin Gatchalian said lowering Manila Electric Co.’s system loss to 5 percent from  6.5 percent may reduce the current cost of electricity by P0.12 per kilowatt hour, or a consumer savings of approximately P3.38 billion a year.

Gatchalian has asked the ERC to conduct a periodic review of the system loss program to encourage power suppliers to engage in more efficient processes.

Gatchalian, chairman of the Senate Committee on Energy, also asked the ERC to speed up the assessment of the program to facilitate the early implementation of new system loss caps that would reduce the charges of private distribution utilities and electric cooperatives to consumers.

“The ERC should have a regular mechanism that will study the system loss every so often,” Gatchalian said in a statement.