ERC lowers system loss charges to lower consumers’ electric bills

The Energy Regulatory Commission (ERC) has issued a resolution lowering the “system loss” charges that power distributors pass on to their customers’ monthly electricity bills.

The “Resolution Adopting the ERC Rules for Setting the Distribution System Loss Cap” embodies the new system loss cap that distribution utilities recover by charging it to consumers.

The resolution takes effect starting with the May 2018 billing period.

“The lowering of the system loss caps is a move to bring down power rates and help electricity consumers mitigate the impact of rising costs of commodities and services,” ERC Chairperson Agnes Devanadera said.

“This will encourage distribution utilities to improve their distribution system and facilities so that they adhere to the newly-prescribed system loss cap,” the official noted.

Currently, distribution utilities charge an 8.5 percent DSL while electric cooperatives charge 13 percent.

Once resolution is in place, distribution utilities, like the Manila Electric Company, should charge a 6.50 percent system loss cap for 2018, lowering it gradually each year until it reaches 5.50 percent by 2021. 

However, Meralco told GMA News Online its system loss levels were less than the 8.5-percent cap.

“The performance below the cap level has benefited our customers through lower rates. For example, if you compare the system loss charges in 2011 to that of 2017 you can really see that our system loss charge has decreased over the years,” Meralco spokesperson Joe Zaldarriaga said.

Electric cooperatives—grouped into three clusters based on technical similarities—can charge a 12.00 percent system loss cap this year, reducing it gradually down to 8.25 percent by 2022, according to the commission.

Devanadera noted the ERC is mandated to study and update the system loss caps charged by distribution utilities against their customers. 

“The newly-prescribed system loss cap is a by-product of a well-thought study taking into account the relevant technical criteria and will promote the distribution utilities’ efficient operation and service,” she said.

“The ERC will keep on looking for measures to bring down the electricity rates which are considered as among the highest in Asia,” she said. —VDS, GMA News