Review of system loss cap urged

by Alena Mae S. Flores – May 22, 2017 at 08:28 pm

from Manila Standard Today

Senator Sherwin Gatchalian has asked the Energy Regulatory Commission 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.

He noted the long gap between the last ERC regulation of the recoverable system loss charges, which was in 2008, and the ongoing review of the program.

“The last caps are still in the 2008 levels. The ERC can do a review of the program at shorter intervals. The utilities are now more efficient in power generation and distribution because they are already equipped and very knowledgeable on how to reduce their system losses,” he said.

ERC is currently assessing the system loss program, and is set next month to start public consultations and group discussions on the proposed new caps submitted by a third party that reviewed documentary submissions of distribution utilities and electric cooperatives.

The new caps, once approved, will take effect in 2019 for private distribution utilities, and in 2020, for electric cooperatives. The next scheduled assessment will be after four years for private utilities, and six years for rural cooperatives.

“I find this too long. It is only 2017, that’s two more years. There must be a way that the caps can be changed more regularly. Remember that a day saved is a day advantage to the consumers. Consumers should not continue to be burdened with a high cost of system inefficiency,” the lawmaker said.

Gatchalian filed Senate Bill No. 1188, which seeks to reduce the existing system loss cap for private distribution utilities to 5 percent (from 8.5 percent), and to 10 percent (from 13 percent) for electric cooperatives. The measure also proposes the exemption of system loss charges from value added tax.

Gatchalian said Manila Electric Co. had maintained a system loss charge of 6.5 percent and that lowering this to five percent could possibly reduce the current cost of electricity by P0.12 per kilowatt hour, or a consumer savings of approximately P3.38 billion per year.

He said lowering the system loss cap for the worst performing electric cooperatives would lead to reduced costs of P0.26 per kWh, or annual savings of P2.8 billion for consumers in covered jurisdictions.