DOE eyes NEA loans to help electric co-ops upgrade facilities, cut system losses

The National Electrification Administration (NEA) may provide loans to help electric cooperatives upgrade their facilities and reduce system losses, a Department of Energy (DOE) official said Wednesday, following President Ferdinand Marcos Jr.’s call to remove system loss charges from consumers’ electric bills.

DOE Undersecretary Rowena Cristina Guevara, who oversees the Electric Power Industry Management Bureau, said electric cooperatives and distribution utilities need capital expenditures (CAPEX) to upgrade their facilities and reduce technical system losses.

“Our electric cooperatives and distribution utilities also need capital expenditures to reduce technical system losses. In the past, however, the approval of CAPEX requests by the ERC took too long,” Guevara told reporters.

Guevara said, however, that regulatory approval of such investments can take time, prompting the DOE to look for ways to speed up funding for system upgrades, including tapping the NEA for long-term loans.

“We also need to talk to the National Electrification Administration because it needs to provide loans or long-term financing so electric cooperatives can carry out system improvements,” she added.

System loss refers to electricity lost during distribution due to technical and non-technical factors.

Technical losses occur naturally as electricity travels through power lines and equipment, including transformers. Non-technical losses, meanwhile, include electricity theft, pilferage and illegal connections such as the use of “jumpers.”

The DOE earlier said households could see savings of up to 10% on their electric bills once system loss charges are removed.

The department, however, said implementation could take at least a year as electric cooperatives and distribution utilities would need time to upgrade their facilities and acquire new equipment to reduce system losses.

"At the end of the day, once technical system losses are reduced and non-technical system losses are eliminated or minimized, electricity prices will go down," she said. — MCG, GMA News