ERC pares system loss caps for utilities

The Energy Regulatory Commission (ERC) has dangled cost savings to consumers on its new rules to further cut system loss caps for distribution utilities (DUs) over four- to five-year period.

The lower system loss, as prescribed by the regulatory body, shall be effective in May, 2018 billing this year.

As set forth under the rules, private distribution utilities (DUs) like the Manila Electric Company (Meralco) are being mandated to pare system loss for pass on to consumers at a lower level of 6.5-percent starting this May from the prevailing rate of 8.5-percent.

The intent of the policy also is to further lower system loss charge pass-on threshold to 5.5-percent until year 2021.

For electric cooperatives, the system loss component to be charged shall be brought down to 12-percent this 2018 from the current level of 13-percent; and will be lowered ultimately to 8.25-percent through year 2022. ERC Chairperson Agnes T. Devanadera emphasized that “the lowering of the system loss caps is a move to bring down the power rates and help electricity consumers mitigate the impact of rising costs of commodities and services.”

The regulatory body expounded that the ECs “shall charge within the range of 12-percent to 8.25-percent distribution system loss cap until 2022 onwards, based on the cluster grouping that they were assigned in.”

There had been no definite numbers provided by the ERC though as to how much cost savings the Filipino consumers can look forward to on the reduced level of system loss that DUs will have to pass on in the electric bills. Devanadera just indicated that the recently issued rules of the Commission “will encourage distribution utilities to improve their distribution system and facilities so that they adhere to the newly-prescribed system loss cap.”

The ERC chief further qualified that they are mandated “to study and update the distribution system loss caps charged by the distribution utilities to electricity consumers.”

On the trimmed system loss caps, it was noted that such had been hinged on a study “taking into account the relevant technical criteria,” and targeted to “promote the distribution utilities efficient operation and service.”