Senators file separate bills vs systems losses charges

MANILA, Philippines - Two senators on Thursday filed separate bills banning the practice of power distributors charging consumers their systems losses. The bills were filed by Senate minority leader Aquilino Pimentel Jr. and Sen. Loren Legarda. Pimentel's Senate Bill 2314 and Legarda's SB 2289 seek to amend Republic Act 7832, otherwise known as the Anti-Electricity Pilferage and Theft Act of 2002. Noting that consumers are burdened by soaring electricity rates, Pimentel lashed out against the practice of private electric utilities and rural cooperatives of billing their expenses or losses that to consumers. Pimentel said that the power firms should absorb those losses as part of business risks. “One of the reasons why electricity rates show no sign of decreasing is the fact that these power utilities are passing the burden of the so-called systems losses on to consumers," he said. Systems loss accounts for at least 8 percent of the bill of an average consumers or about 58 centavos per kWh. From 2003 to 2007, consumers paid P84.6 billion for Meralco's systems losses, based on 70.55 centavos per kWH systems loss charge. Systems losses include the technical and non-technical losses incurred by electric companies. As electricity flows through electric wires, part of it disappears in the form of heat called technical losses; some of it are consumed by illegal users called non-technical losses. Technical losses are part of the overhead in the distribution of electricity while non-technical losses indicate pilferage. Under RA 7832, electric utilities was originally allowed 15% of the systems losses to be included in the calculation of their rate base. Over the years there was a progressive lowering of systems losses. Presently, the rate is 9.5 percent. Pimentel said it is unfair to pass such burden to the consumers of electricity. “Why in heaven’s name should consumers who are not responsible for the systems losses -- whether man-made or mechanically-cause -- be made to pay for the losses?" he said. “If the power firms make money, they keep it as profits. If they lose, they charge their losses to their customers! That’s not free enterprise at all. That’s fooling the people twice over because we are even told that the payments for systems losses are subjected to a 12 percent Value Added Tax (VAT), that we too have to bear," he said. Since the systems losses are losses of the electric utilities, Pimentel said these should be shouldered exclusively by them. For her part, Legarda focused on pilferage aspect of the systems losses and she proposed to increase penalties for the crime. Legarda noted that in 1994, the country's total electric energy consumption was estimated at 30.459 billion kilowatt hours. In 2005, this figure has increased to 56.508 Billion, an increase of 54% since 1994. However, power losses in 1994 were recorded at 15.5% and for 2001, 12.5% of the total electric energy consumed, a decrease of only 3% despite a 54% increase in energy consumption. She said these facts are contributing factors to the Philippines having one of the highest power rates in Asia, which has a direct effect on this country’s competitiveness. “Pilferage of electricity is condemnable as thievery, but it is doubly reprehensible because of the soaring power rates that continue to haunt us today and ordinary and honest customers are made to shoulder the burden of losses. It equates to millions of pesos of benefits to economic saboteurs, to higher cost of electric bills on the part of paying subscribers, and to a bigger investment for new power generating plants," she said. Legarda's measure proposed to expand the coverage of the law to include not only illegal use of electricity and theft of electric power transmission line/ materials but also theft of distribution line/ materials. This amendatory bill seeks to protect consumers by preventing retailers of electricity from passing of the cost of pilferage and the cost of the inefficiencies of electric utilities to consumers. This will avoid the highly absurd scenario where innocent consumers will have to pay for the criminal activities of some consumers, she said. “This will prevent electric companies from being complacent and not any more interested to reduce the incidence of pilferage. By not charging systems losses to innocent consumers, we are in effect, forcing the retailer of electricity to be more efficient, more vigilant, and more concerned in seeing to it that they can reduce and eliminate pilferage," she said. “But to cushion the impact on retailers of electricity who will now be unable to pass on systems losses to consumers, the bill is increasing the fine for pilferage from P50,000 to a range of P150,000 to to P500,000 to deter the commission of the crime and to prevent utility companies from preying on honest consumers," Legarda explained. - GMANews.TV