Manila: Power distributors could potentially be prohibited from recovering system-loss costs from consumers, a move that includes both technical and non-technical losses, according to the Energy Regulatory Commission (ERC). However, the ERC suggests that such a policy might need to be phased in to prevent financially weaker utilities from facing collapse.
According to Philippines News Agency, ERC Chairperson Francis Juan clarified this point as the Senate Committee on Energy explored whether households should continue to pay for electricity lost before reaching their meters. Juan stated that it is possible to reduce these recoveries to zero or even prohibit them altogether, while emphasizing that this would not eliminate the electricity losses themselves.
Technical losses occur naturally as electricity is transmitted through lines and transformers, whereas non-technical losses involve issues like pilferage and illegal connections. Juan suggested that a policy could be adopted requiring distribution utilities to absorb these costs, but highlighted the need to consider the financial conditions and efficiency of utilities across the country.
The transition to such a policy raises questions on its implementation. Should the cap be reduced all at once or phased in over time? This is a key point of discussion, as articulated by Juan during the committee meeting.
Senate Committee Chair Sen. Erwin Tulfo urged the ERC to determine if requiring power companies to absorb these losses would jeopardize their operations. Tulfo questioned whether utilities like NGCP and Meralco could face shutdowns or bankruptcy if they are made to shoulder both technical and non-technical losses entirely.
Juan noted that some distribution utilities have managed to keep their system losses within regulatory limits and might be better equipped to handle additional costs. However, other utilities, particularly certain electric cooperatives, still struggle with high system losses and already absorb part of these expenses. Shifting the entire burden to these entities could complicate their operations and threaten their viability.
Senate President Sherwin Gatchalian emphasized that entities capable of reducing system losses should bear the responsibility for their costs, suggesting investments in upgraded infrastructure and equipment as a means to cut technical losses.
The Senate is currently evaluating multiple proposals aimed at removing or reforming system-loss charges as part of broader efforts to reduce electricity costs for consumers, while ensuring the sustainability of distribution utilities and electric cooperatives.
