System loss, electric cooperatives, RES and nuclear power

System loss (SL) in electricity comes from technical losses or due to physics and from non-technical losses or due to thefts and cheats. In the Philippines, those under private and corporate distribution utilities have lower SL – only about five percent under Meralco –  and an average of 10.5 percent under electric cooperatives (ECs) nationwide.

Distribution of SL, technical loss is about 99 percent in Meralco and non-technical loss only about one percent. Under ECs, non-technical loss is about four percent out of 10.5 percent total SL, according to Department of Energy (DOE) Undersecretary Rowena Guevarra.

No country in the world has zero SL, precisely because it is mainly due to physics. The transmission and distribution system losses as percent of electricity output as of 2024 are as follows: US 5.3, Canada 4.2, Germany 5.1, Italy 7.1, France 6.6, Spain 8.3, UK 9.9.

In Asia, the SL in percent in 2024 are: Japan 4.9, South Korea 3.3. In 2023: IVM TPC Indonesia 6.5, Vietnam 6.6, Malaysia 6.9, Thailand 7.2, Philippines 10.0, Cambodia 11.6 (data from WB, World Development Indicators database 2026).

So the problem on SL is more pronounced under ECs. See these reports and opinion pieces in The STAR this month alone: “Electric coops” (by Iris Gonzales, Aug. 4),

“ERC to remove VAT on system losses” (Aug. 12), “Knee-jerk reaction” (by Mary Ann Reyes, Aug. 15), “Meralco boosts drive vs electricity theft, system losses” (Aug. 17),

“Meralco system losses among industry’s lowest – exec” (Aug. 21), “‘System loss charges stay until next year’” (Aug. 25).

The last report is about the P7.5-billion of taxpayers’ money that the DOE plans to send to ECs to help eliminate non-technical SL. So the inefficiencies of many ECs will be rewarded with more taxpayers money, not good.

ECs are protected and pampered by politics via the National Electrification Administration (NEA), their party-list congressmen and LGUs. They have little incentive to be very efficient because they are protected by politics.

ECs should become corporations, registered and monitored by the Securities and Exchange Commission (SEC) and not NEA. ECs should not be entitled to any taxpayers’ subsidy and bailout, they should be exposed to corporate expansion or bankruptcy.

There are many ways to bring down electricity prices in the Philippines which we have not really optimized. I will cite only three.

One, just expand power generation, go for terawatt-hours (TWH) targeting, not renewable energy (RE) targeting. Instead of targeting 35 percent RE of total electricity by 2030, 50 percent RE by 2040, we should target raising our annual power generation from the current five TWH/year to 10 TWH/year by 2030, 14 TWH/year by 2035, 18 TWH/year by 2040 and so on.

Vietnam has 16 TWH/year average in 2025, they should have 20 TWH/year by 2030 and so on. The bulk of their power generation comes from coal, about 48 percent of total electricity, followed by hydro.

Two, open electricity distribution to more competition nationwide. The Retail Competition and Open Access (RCOA) provision of the EPIRA law of 2001 provides for retail electricity supply (RES) aside from captive customer system under geographically franchised ECs and private distribution utilities.

Three, higher and more efficient investment in transmission and grid management and operation especially that we are an archipelago. So many big islands with big population that must be interconnected with high capacity transmission lines and cables. So far, NGCP is doing this work efficiently but hounded by restrictions and regulations on capex development and cap on investment recovery via maximum annual revenues.

Many big islands and provinces do not have sufficient baseload power capacity until now, like Negros Island with two provinces. It relies only on geothermal power of 200-plus MW capacity plus so many solar farms. Negros has no coal plant yet imports coal power perhaps daily from Cebu and Iloilo, otherwise Negros would be the blackout capital of the Philippines due to insufficient generation.

On having more distribution competition, two weeks ago, the Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCII) held an Energy Solutions Forum which tackled topics on power cost management and optimization for commercial and industrial consumers.

Meralco PowerGen Corp. (MGEN) was among the corporate participants. During the session on retail electricity supplier, MGEN relationship management head Nicko Feliciano highlighted that sustainable energy savings require an integrated approach combining market-based supply contracts with asset-based solutions like rooftop solar, battery storage and energy efficiency programs. He emphasized that this dual strategy enables enterprises to optimize operational costs and transform energy management from a cost center into a strategic advantage. Cool.

On expanding power generation, nuclear energy should be part of it. Early this month, AboitizPower (AP) and Korea Hydro & Nuclear Power Co., Ltd. (KHNP) signed an MOU to explore nuclear energy cooperation in the Philippines, held at at KHNP headquarters in Gyeongju, South Korea. DOE Secretary Sharon Garin, Napocor president and CEO Jericho Jonas Nograles and AP president and CEO Danel Aboitiz were also there.

KHNP is the largest power generation company that generates about 33 percent of total electricity in South Korea. They operate 26 nuclear power plants, 21 hydropower plants (excluding small-scale facilities), and 16 pumped storage hydropower plants in South Korea and delivered the Barakah Nuclear Power Plant in UAE.

Carlos Ramon Aboitiz, AP chief corporate services officer, correctly observed that: “Nuclear energy is complex and highly regulated, and any future role for it must be grounded in rigorous technical assessment and strong regulatory oversight, we see significant value in learning from KHNP’s decades of experience and we look forward to working alongside the Department of Energy to responsibly assess nuclear energy’s role in the country’s energy future.” Nice.