ERC commissions study on system loss charges

MANILA, Philippines - The Energy Regulatory Commission (ERC) has tapped a third party consultant to do a review on the system loss charges aimed to reduce the pass-on burden to consumers.

The power regulator commissioned a third party to study and make reconmmendations on the system loss charges aimed to benefit consumers, ERC spokesperson Floresinda Digal said after Sen. Sherwin Gatchalian asked for updates on the reduction of system loss charges during a Senate hearing yesterday.

System loss refers to unbilled power caused by pilferage and physical loss of energy when electricity passes through distribution lines, which can be passed on to consumers as stated under Republic Act 7832, or Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994.

The ERC awarded last month the contract to conduct the system loss review to local consultancy firm PowerSolv Inc., Digal said.

Under the terms of reference (TOR), PowerSolv will review how the components of the system loss charge can be segregated into technical and non-technical items as well as study updating the system loss cap, she said.

“The first part of the TOR will be a study on how system loss can be segregated to technical and non-technical, including what levels of technical and non-technical, if ever, will be recoverable. The second part is the establishment of a new cap we are presently at 8.5 percent and 13 percent. They will also study if it can still be lowered,” Digal said.

Technical system loss is an inherent loss in the physical delivery of electricity while non-technical system loss is a result of pliferage, human error like tampering of meters and erroneous meter reading. 

Currently, the ERC has set the system loss cap at 8.5 percent for privately-owned distribution utilities and 13 percent for electric cooperatives (EC), which can be passed on to consumers through a line item in their monthly electricity bills.

In particular, system loss of Manila Electric Co. (Meralco), the country’s largest power distributor, is 6.46 percent, way below the cap.

Meanwhile, 89 ECs were able to meet the cap set by ERC in 2015, based on the latest data from the National Electrification Administration (NEA), the agency tasked for the rural electrification program.