At least 18 electric cooperatives (ECs) are in breach of the 12-percent system loss cap being enforced by the Energy Regulatory Commission (ERC) within this bloc of industry players.
According to the Philippine Rural Electric Cooperatives Association Inc. (PHILRECA), of the 121 ECs in the country, only 15-percent failed to comply with the regulator-mandated level of system loss.
When it comes to the worst performers, PHILRECA noted that only five (5) ECs have logged system losses that are beyond 20-percent.
“Five ECs or 4.13-percent were reported to have exceeded 20% system loss due to problems such as pilferages, overloaded system, long distribution lines (which increase voltage drop) and delayed implementation of capital expenditure projects due to regulatory requirements,” Philreca explained; while adding that a compounding factor is also the peace and order situation in some service areas of the ECs.
The group further emphasized of the 117 ECs that were assessed, 99 posted system loss that are within the cap; and 59 of these ECs registered singe-digit system loss ranging from 1.83-percent to 9.99-percent.
For slacker ECs to step up on their adherence to the prescribed system loss cap, PHILRECA indicated they are constantly in discussion with key stakeholders – such as the National Electrification Administration (NEA), Energy Regulatory Commission (ERC), Department of Energy and National Grid Corporation of the Philippines (NGCP), so they can come up with recommendations and solutions “on how to address the concerns of these underperforming electric cooperatives.”
The high system loss records of some ECs had been placed on sharp focus during this week’s hearing by the House Committee on Good Government and Public Accountability, as it was no less than ERC Chairperson Agnes T. Devanadera who admitted that some ECs have more than 20-percent system loss.
PHILRECA nevertheless explained that “system loss is inherent in the distribution of electricity,” with the group emphasizing that “it is impossible scientifically to create or install a transmission or distribution facility without the system incurring any form of energy loss.”
It stressed “distribution utilities can try to lower such losses to as low as scientifically possible, but there are limitations in as far as technology and economics are concerned.”
The aggrupation of ECs added bringing system loss level to the minimum may likely require more investments for system improvements, that in turn may cost more on consumers’ pockets if the corresponding capital outlay will be passed on via their electric bills.
“Repeated simulations showed that the costs that the DUs will have to incur in investing on other necessary infrastructure will significantly outweigh any possible decrease in the system loss charge,” PHILRECA said.
It similarly argued that since capital expenditures are pass-through charge to consumers, initiatives to extremely pare system loss may “only lead to power rate increases to customers.”
PHILRECA thus noted “it is for this reason that there exists an approved system loss rate where distribution utilities are allowed to recover from the electric consumers.”