By Butch Fernandez & Lenie Lectura
The Senate Committee on Energy is pressing the Energy Regulatory Commission (ERC) to closely track down the system-loss program to encourage power-supply stakeholders to stick to “more efficient processes” that would benefit consumers down the line.
At the same time, Sen. Sherwin T. Gatchalian, committee chairman, prodded ERC officials to prioritize assessment of the program and facilitate early implementation of new system-loss caps to reduce charges private distribution utilities and electric cooperatives pass on to their consumers.
Gatchalian said the ERC should install “a regular mechanism that will study the system loss every so often”, pointing out the wide gap in between the ongoing review of the program and the last ERC regulation of the recoverable system-loss charges, dating back to 2008.
Noting that the last caps were still in the 2008 levels, the senator insisted that the ERC should review the program at shorter intervals, observing that 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”.
In turn, ERC officials informed members of the Senate Energy Committee that an assessment of the system-loss program is ongoing, also reporting that the ERC is set to hold “public consultations and group discussions on proposed new caps submitted by a third party that reviewed documentary submissions of distribution utilities and electric cooperatives”.
The senators were told that new caps, once approved, are set to take effect in 2019, for private distribution utilities; and in 2020, for electric cooperatives.
ERC officials, likewise, reported the next scheduled ERC assessment will be held after four years for private utilities and six years for rural cooperatives, but Gatchalian griped this was not acceptable. “I find this too long.”
Gatchalian added: “It is only 2017, that’s two more years. There must be a way that the caps can be changed more regularly. Remember that a day saved is a day of advantage to the consumers. Consumers should not continue to be burdened with a high cost of system inefficiency.”
To address the problem, he authored Senate Bill 1188 aimed at reducing existing system-loss cap for private distribution utilities to 5 percent (from 8.5 percent), and to 10 percent (from 13 percent) for electric cooperatives. The Gatchalian bill also provides exemption of system-loss charges from value-added tax.
Noting that Meralco has maintained a system-loss charge of 6.5 percent, Gatchalian said lowering this to 5 percent can possibly reduce the current cost of electricity by 12 centavos per kilowatt-hour, or consumer savings of approximately P3.38 billion per year.
Also, lowering the system- loss cap for the worst-performing electric cooperatives will lead to reduced costs of 26 centavos per kWh, or annual savings of P2.8 billion for consumers in covered jurisdictions.