ERC eyes lowering system loss cap
By Abigail L. Ho
Philippine Daily Inquirer
First Posted 02:59:00 07/24/2008
In a bid to reduce electricity prices, the Energy Regulatory Commission (ERC) is looking at lowering the limit on system loss charges that private distribution utilities and electric cooperatives can pass on to customers, ERC Chairperson Zenaida Ducut said Thursday.
At present, distribution utilities such as Manila Electric Co. can pass on to customers up to 9.5 percent of their system losses— the cost of electricity lost due to non-technical causes such as pilferage or technical causes such as inefficiency. Anything beyond the limit is absorbed by the company.
Rural electric cooperatives have a system loss limit of 14 percent.
Ducut said the caps had to be reviewed, having been in place since 1999.
“Of course, any move to change the present system loss caps will require amendments to certain rules,” she said at a news briefing. “Rest assured that everyone affected by such move will be afforded due process and given the opportunity to participate in the public consultations that will be conducted on such amendments.”
ERC executive director Francis Saturnino Juan said that under the law against pilferage of electricity, distribution utilities should file an application to reduce their system loss limits four years after the effectivity of the law.
He said the ERC’s study was still very preliminary and there were no indications yet of by how much the limits could be reduced.
The ERC will look at models in other countries to have a benchmark for the possible new limits, he said.
Juan said another way of reducing the system loss charge would be to remove the “company use” component of system losses.
At present, distribution utilities are allowed to charge one percent of the cost of their own electricity consumption or of their actual electricity usage, whichever is lower, as system loss. With editing by INQUIRER.net
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