Power distributors want share in system loss savings

MANILA, Philippines - Power distributors like Manila Electric Co. (Meralco) are seeking a share in the savings generated from the reduction of system losses.

The Energy Regulatory Commission, through a public notice, has sought comments regarding the “Rules to Govern the Implementation of a Benefit-Sharing Scheme to Lower the System Losses of Electric Distribution Utilities,” a scheme that gives incentives to power providers for maintaining system loss below cap.

The Private Electric Power Operators Association Inc., Philippine Rural Electric Cooperatives Inc. and Meralco filed the joint application for the incentive sharing scheme.

“When distribution firms are below the (system loss) cap, they want a share in the savings,” said ERC executive director Francis Saturnino C. Juan.

System loss refers to unbilled power caused by pilferage and physical loss of energy when electricity passes through distribution lines.

The ERC has set the system loss cap at 8.5 percent for private distribution utility (DU) firms and 12 percent for electric cooperatives (EC).

The cost of system loss that exceed the cap are shouldered by power firms while consumers benefit from lower system loss through a reduction in their electricity bills.

Juan said the new scheme would result in lower savings for consumers, but is expected to encourage power firms to trim power loss.

“This rule is to further motivate the private DUs and electric cooperatives (ECs), respectively, to bring down system loss further below the system loss cap since the associated operating expenditures and capital expenditures become higher and savings below the capped are passed on to consumers,” ERC said.

The ERC currently applies performance incentives for private DUs and consumer-owned ECs, with higher rates granted to well-performing power distributors.

Meralco, the country’s largest power distributor, recorded a 12-month moving average system loss of 7.19 percent as of end-September, lower than the 7.43 percent during the same period in 2011.

Meralco earlier said it lowered the system loss through new substation and expansion of existing substations.

Electric cooperatives being supervised by the National Electrification Administration posted an average record low system loss of 11.87 percent in 2011, a reduction of 0.46 percentage point from the 12.33 percent in 2010.

Under existing rules, whenever actual system loss level of any DU falls below the cap, the savings will be passed on to customers.

But the power distributors called for an equitable sharing between DUs and the end-users, with the DU’s share not to exceed 50 percent.  – with Czeriza Valencia, Interaksyon