Congress seeks removal of system loss charges

The House committee on energy chaired by Rep. Lord Allan Jay Velasco (Lone District, Marinduque) on Tuesday gathered comments from various sectors affected by proposals to stop private electric utilities from collecting system loss charges from consumers and reduce the cap of recoverable system loss of rural electric cooperatives to a maximum of five percent.

In a hearing, the committee sought the opinion of private electric utilities on House Bills 942, 2297 and 6341 authored by Reps. Tobias Tiangco (Lone District, Navotas City), Maximo Rodriguez (2nd district, Cagayan de Oro City), and Ako Bicol Party-list Reps. Rodel Batocabe, Alfredo Garbin and Christopher Co, seeking to prohibit power distribution utilities (DUs) from collecting system losses from consumers, amending for the purpose Republic Act 7832, also known as "Anti-electricity and Electric Transmission Lines/Materials Pilferage Act of 1994."

The three bills are part of the legislative priorities of the House. I hope we'll be able to further appreciate the issue and agree on and come up with more appropriate remedial administrative or legislative measures that will benefit the electric consumers, said Velasco.

Velasco said in an earlier briefing, former Energy Regulatory Board (ERB) chairman Rex Tantiongco, exposed the extent of system loss when electricity travels a long distance.

He explained that the further the electric current travels from power generation to the end-users, the more losses are incurred. He also said the future solution to the issue is the use of super conducting materials which will drastically lessen the system loss, said Velasco.

With the better understanding of system loss, Velasco said the committee hopes it can come up with recommendations for the benefit of electric consumers in terms of lowering the cost of electricity through reduction of system loss charges being passed on by the private distribution utilities and electric cooperatives.

During the hearing, Tantiongco said the three bills on reduction of system loss are very timely.

If I may remember it correctly during the EPIRA (Electric Power Industry Reform Act) time, marami po ang tumutol sa paglalagay ng cap ng line loss. Ang sa utility po noon ay 9.5 percent ang nailagay na cap at sa cooperatives ay 14 percent. Halos lahat po ng utilities at cooperatives ay tumutol po dito, said Tantiongco.

In a position paper submitted earlier by Tantiongco, he mentioned that there are normal and abnormal losses in any electric distribution system.

He explained that normal loss is a consequence of natural phenomena and it is often referred as technical systems loss. It is an avoidable loss and is inherent in the manner by which electricity is generated, transmitted and distributed, he said.

Tantiongco said abnormal loss is caused by avoidable conditions such as erroneous meter reading, wrong meter multiplier and the like. Abnormal loss is part of non-technical loss which includes electricity theft and pilferage, he said.

Prof. Jordan Orillaza, lead consultant of PowerSolv, the group commissioned by the Energy Regulatory Commission (ERC) to conduct an independent study on system loss, said their company was formed basically to assist the power industry do technical studies which might be needed because of the Electric Power Industry Reform Act (EPIRA) of 2003.

Orillaza said some of the solutions that PowerSolv has provided are softer based solutions which analyze the operations of the distribution utilities, and specifically work on simulation on distribution system losses.

He said the softer based solutions had been developed and are now being used by many clients both in private and electric cooperatives.

Atty. Rowena Joyce delos Santos of the Department of Energy said the DOE has already submitted its position paper and is supportive of any measure that will lower system loss which eventually entails lowering of electricity cost.

However, Delos Santos said the bringing down of system loss charges should be to the least possible weight percentage to address different structures, characteristics and positions of distribution utilities that pass on to the consumers.

Tiangco, author of HB 942, said based on the statements made by the resource persons, removing system loss from power cost is resolvable. The solution is not passing on what you cannot solve as of now to the consumers. But the solution is challenging yourselves on how to solve the problem. Sa tingin ko yun ang mas ayos para sa ating mga consumers, said Tiangco.

Yung sinasabi nyong abnormal losses, may solusyon dyan at pwedeng ibaba o pwedeng mawala kung gagawin lang ninyo, said Tiangco.

Ivanna Dela Pena, First Vice President and Head of Regulatory Management of the Manila Electric Company (Meralco), said recovering system loss is a practice not only in the Philippines but also abroad.

Dela Pena said in some jurisdictions, there is no cap. But Congress in 1994 thought that there should be a cap on the system loss charges because in the case of Meralco in 1986, it peaked at 21 percent.

But because of RA 7832, we had to face a system loss cap which gradually went down and eventually dropped to 9.5 percent, and the ERC brought this down further to 8.5 percent, said Dela Pena.

Source: House of Representatives

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