Gatchalian calls for periodic review by ERC of system losses suffered by power grid
THE Energy Regulatory Commission (ERC) must set up a mechanism that will allow a periodic review of how much power is lost when power suppliers bring electricity to end users, including households.
It should also hasten its assessment of a program that will help the early implementation of a revised system loss caps or the allowed percentage of power supply that is lost in the delivery of electricity, the equivalent cost of which is added to consumers’ monthly bills.
Senator Sherwin T. Gatchalian, chairman of the Senate committee on energy, made the call as the ERC has yet to come up with new system loss program, months after the issue resurfaced last year.
“The ERC should have a regular mechanism that will study the system loss every so often,” Mr. Gatchalian said in a statement.
He noted the long time between the last ERC regulation on the recoverable system loss charges, which was in 2008, and the regulator’s ongoing review of the program.
At present, distribution utility Manila Electric Co. maintains a system loss charge of 6.5% while electric cooperatives keep the threshold at 13%. Private utilities are allowed to recover from consumers up to 8.5% as system loss.
Mr. Gatchalian, in Senate Bill No. 1188, seeks to reduce the existing system loss cap for private utilities to 5% from 8.5%, and to 10% from 13% for electric cooperatives. The measure also calls for the exemption of system loss charges from the value-added tax.
He said lowering the threshold for private utilities could reduce the cost of electricity by 12 centavos per kilowatt-hour ( kWh) or a combined savings of about P3.38 billion yearly for consumers.
Lowering the cap for the “worst performing electric cooperative” could cut the cost for the consumers they serve by 12 centavos per kWh, or a collective savings of around P2.8 billion, he added.
“The last caps are still at 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,” Mr. Gatchalian said.
In a previous Senate hearing, ERC officials said they were assessing the existing system loss program. Mr. Gatchalian said they told senators that the regulator is set next month to start public consultations and group discussions on a revised caps. He said the proposed caps were submitted to a third party that reviewed documentary submissions of distribution utilities and electric cooperatives.
If approved, the revised caps will take effect in 2019 for private distribution utilities, and in 2020, for electric cooperatives. The next assessment will be after four years for private utilities, and six years for cooperatives.
Mr. Gatchalian said: “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.”