MANILA, Philippines--The Energy Regulatory Commission’s plan to cut system loss limits will likely be more detrimental than beneficial to the power industry in the long run, as it fails to consider a number of factors that affect electricity service and the necessary preparations that power distributors have to make if the plan pushes through, says the power retailer Manila Electric Co. (Meralco).

In a position paper submitted to the ERC, Meralco said a reduction of the current caps—9.5 percent for private distributors and 14 percent for electric cooperatives—could send many distributors on the path to extinction.

“A kilowatt-hour not allowed to be recovered by a DU for not meeting its system loss cap would amount to about five times what it is allowed to earn as distribution revenue,” Meralco said. “A DU with losses substantially above the set cap would have a hard time financing system loss-reduction projects ... and would set the [distribution utilities] and its ability to provide electric service off to a fast downward spiral.”

Meralco said the system loss levels of power distributors ranged from 5.78 percent to 45.85 percent.

Meralco itself has yet to reach the limit, closing 2007 with a system loss level of 9.65 percent. Edited by INQUIRER.net