CERA seeks review of system loss policy

CEBU, Philippines — The Cebu Electricity Rights Advocates (CERA) has called on the Energy Regulatory Commission (ERC) to reassess the current system loss policy cap, citing its impact on rising electricity rates and overall business competitiveness in Cebu.

According to CERA convenor Nathaniel Chua, electric cooperatives currently operate with a system loss cap of 12 percent, a significant factor in the high electricity rates passed on to consumers.

“We found that one primary reason for the increasing electricity rates among electric cooperatives is their high system loss cap. These losses are then transferred to consumers, resulting in disproportionately high electric bills,” Chua said in a statement released yesterday.

Chua explained that in any industry, a certain level of loss is an inherent business risk. However, when inefficiencies lead to excessive system loss, the financial burden ultimately falls on consumers.

“When electricity rates exceed actual consumption levels, it not only becomes unfair for consumers but also discourages quality control measures and fosters complacency among providers,” he added.

CERA emphasized the urgency of addressing system loss concerns as Cebu grapples with power supply shortages, particularly within the franchise areas of Cebu Electric Cooperative (CEBECO).

On January 25 and 28, CEBECO announced scheduled power interruptions lasting at least six hours, significantly affecting business operations.

“These disruptions harm the business sector and could discourage potential investors from considering Cebu as a viable investment destination,” Chua noted.

Beyond cost concerns, CERA also raised awareness about the dangers of illegal electricity connections, or “direct tapping,” which significantly contribute to system loss.

Chua revealed that in 2024, unauthorized power tapping accounted for five percent of Visayan Electric’s total electricity consumption. He warned that such practices not only inflate system loss but also pose serious safety risks.

“The Bureau of Fire Protection (BFP) in Cebu City has reported that electrical misuse, including illegal tapping, remains one of the leading causes of fires due to substandard installations,” he said.

Unlike electric cooperatives, which operate under a 12 percent system loss cap, private distribution utilities like Visayan Electric are limited to 5.5 percent.

While CERA supports Visayan Electric’s campaign to curb illegal tapping, it is also urging the ERC to reassess the system loss cap policy to ensure fairness and efficiency in electricity distribution.

CERA’s call for regulatory review underscores the need for reforms to stabilize electricity costs and improve Cebu’s overall energy infrastructure, ensuring long-term sustainability for businesses and consumers alike. — (FREEMAN)