ERC reviewing system-loss caps to reduce

power rates

By Paul Anthony A. Isla

THINKING of mitigating high cost of electricity to consumers, the Energy Regulatory Commission (ERC) is preparing to review existing policies on system-loss charges.

“In the next few weeks, I have directed my staff to study the possible reduction of the system-loss caps and the phasing out of the company use as part of the determination of system loss,” Zenaida Ducut, ERC chairman, told reporters in a press interview.

The chief regulator said the system- loss caps of 9.5 percent for private utilities and 14 percent for electric cooperatives have been in effect since 1999, or almost nine years already.

“It is high time that we review these caps and possibly reduce them in order to help alleviate the burden to the consumers of these charges,” she added.

Ducut noted that any move to change the present system-loss caps will require amendments to certain rules.

“Rest assured, everyone affected by such move will be afforded due process and given the opportunity to participate in the public consultations that will be conducted on such amendments,” said Ducut.

Lawyer Francis Saturnino Juan, ERC executive director, said the commission has given its staff a directive to determine if there is a way that the system-loss caps can be reduced.

With the existing caps being in place for nine years already, Juan said there could possibly be a way for distribution utilities to bring down their system-loss caps.

Juan also noted that there have been a lot of debates on whether company-use system losses should be part of system loss.

“We are actually looking into the possibility of having the company use incorporated in the private distribution utilities’ allowance for their operations and maintenance expenses,” the ERC official said.

Distribution utilities are given a cap of 1 percent for company use to be part of the determination of system loss.

Juan declined to make any definite percentages right now, since they’re in the process of the study. “But we hope to be able to come out with our recommendations in the next few weeks. And if we shall recommend for the caps different from the existing, we will propose also an amendment to certain rules and we will propose that to the commission for its consideration,” he added.

And if the commission approves that, according to Juan, the ERC will have to schedule a public consultation on these amendments to give an opportunity to the affected distribution utilities and electric cooperatives to air their views on the proposed changes.

Juan said they would also have to determine which model they would try to replicate, considering the feedback they got that the system loss in developing countries hovers around 9 percent to 10 percent and around 3 percent to 4 percent for some developed countries.

By next month, Juan expressed optimism that they would be able to gather bases to recommend new caps different from the present, and be able to come up with draft guidelines or recommendations that will amend the existing system-loss cap.

Depending on the existing rules, Juan said amending the caps could take some time as it will require a series of consultations before the commission could come up with a final determination on this.

“On our part, we will comply and act on this as soon as possible,” he added. “We will also consider each and every distribution utilities and electric cooperatives’ capacity to absorb or shoulder more than what they’re absorbing now if they’re over the caps,” Juan said.

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