ERC to set system loss cap, monitoring in Q4


The Energy Regulatory Commission (ERC) will set a new cap and implementation mechanism for monitoring electricity distributors’ system loss by the fourth quarter of this year, the agency said on Tuesday.

“Our target is we should have a new system loss cap by the last quarter of the year,” ERC spokesperson Floresinda Digal said in an interview.

“What we did was we contracted a consultant. They already submitted their proposal two weeks ago. Since we have quasi-judicial and quasi legislative function, we need to subject new rules to a public consultation,” she explained.

“We will start this in June (1 and 2 for Cebu and Mindanao). It’s a very tight timeline but we hope we can finalize the rule by fourth quarter of this year. That is a very optimistic timeline, barring unforeseen whatever,” Digal said.

On Monday, Senate Committee on Energy chair Sherwin Gatchalian urged the ERC to fast-track its assessment of the system loss program to facilitate the early implementation of new system loss caps that would reduce the charges that private distribution utilities (DUs) and electric cooperatives (ECs) may pass on to their consumers.

Gatchalian also urged the ERC to put in place a periodic review of the system loss program to encourage power supply stakeholders to engage in more efficient processes.

The ERC proposal already segregates technical from non-technical loss, Digal explained. “The non-technical loss has a definite figure: 4.5 percent for ECs and 1.25 percent for private DUs.

While for technical loss, “There’s a proposed formula and cluster range from 2.5 to 7 percent. There’s a formula for distribution recoverable through system loss,” she added.

Digal said that reason why consumers are shouldering the system loss because of Republic Act 7832 otherwise known as the Anti-Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act was signed in 1994.

The law is part of the government’s efforts to provide reasonable retail prices of electricity by setting annual loss caps and enhancing the Performance Improvement Program.

“By nature, electricity is prone to technical losses. We also have non-technical losses caused by pilferage. The law recognizes that,” she explained.

“We’re trying to improve it on the basis that we’ll lower what we think is recoverable considering the authorized capital expenditure which will reduce system loss, what are the existing circumstances of the DUs, what they’ve historically allowed to be lowered and up to what point. That will be the subject of the public consultation,” Digal added.


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