Meralco lowers systems loss rate to 7.35%

Manila Electric Co., the country’s biggest power distributor, posted a significantly lower system loss rate of 7.35 percent in the first half, reflecting an improvement of 0.13 percentage point from 7.48 percent in the same period last year.

According to Meralco, the company’s system loss level in the first six months of the year also outperformed the mandated cap of 8.5 percent set by the Energy Regulatory Commission, thus containing power costs and generating savings for its more than 5 million customers.

Since 2008, when Meralco started outperforming the benchmark set by the ERC, cumulative savings that have been passed on to consumers have reached P5.2 billion.

“Meralco remains intent on delivering 24/7 quality power, absent major weather disturbances, excellent service and new products and services to our fast-growing customer base. We are also single-minded in meeting or besting the high operating and service standards on power availability, reliability, quality, customer service and system loss set by regulators and in driving cost efficiency in our operations,” said company president and CEO Oscar S. Reyes.

System losses refer to the cost of electricity that was either lost in transmission through power lines or pilfered. These losses are passed on to consumers up to a certain percentage or up to the so-called system loss cap, which refers to the limit beyond which a utility is no longer allowed to recover from its customers the cost of electricity.

A lower system loss cap will likely translate to a lower system loss charge for electricity consumers.

In the first half of the year, the system loss charge collected by Meralco from its customers averaged 53 centavos a kilowatt-hour.

The system losses can be pared down through continuous investments to ensure a highly reliable network. Meralco, for its part, has committed to incur higher capital expenditures, in line with the third regulatory approvals of the ERC under the performance-based rate regulation scheme (PBR).

“We remain committed to our capital expenditure programs aggregating P37.2 billion during the period 2011-2015,” Reyes said.

In the first half of the year, consolidated capital expenditures amounted to P4 billion, of which P3.9 billion went to power-related capital projects.