ERC keeps system loss cap for private DUs

MANILA, Philippines — The Energy Regulatory Commission has decided to keep the level of systems loss cap for private distribution utilities (PDUs) at 5.5 percent pending the completion of a review.

In a resolution, the ERC said it signed a partnership agreement with United Nations Office for Project Service (UNOPS) to undertake a review on the setting of new distribution feeder loss (DFL) cap for PDUs.

The power regulator said the study is expected to be completed within the year.

With the pending study, the ERC decided to maintain the approved 2021 DFL cap of 5.5 percent in 2022 onwards “until such time that a new feeder loss cap is promulgated after completion of the study or review.”

The DFL cap will cover all PDUs, except MORE Electric Power Corp., which failed to submit the minimum one-year’s worth of data from 2018 to 2020.

Under the rules, a PDU that fails to submit the minimum one-year’s data shall be assigned a DFL cap of 4.75 percent by 2022 onwards.

MORE Power was granted a franchise to provide power distribution service in Iloilo City under Republic Act 11212 signed by President Duterte on Feb. 14, 2019.

It implemented a P1.8-billion modernization program to improve the efficiency of the city’s power distribution system, cut systems losses and provide reliable, safer and cheaper electricity supply. This includes the replacement of all electric meters in the city with new meters that have been approved and had passed the standards of the ERC as a means of reducing the technical systems losses.

As of 2019, the old utility PECO had recorded systems losses (the amount of electricity lost in the inefficient distribution because of faulty lines and equipment or from pilferage) of 9.03 percent, which is way above the 6.5 percent cap imposed by ERC.

In the past four years, the DFL cap for PDUs has been on a downtrend from 6.5 percent in 2018, 6.25 percent in 2019, six percent in 2020, and 5.5 percent in 2021.

Under the Electric Power Industry Reform Act of 2001, the ERC is mandated to determine the cap on the recoverable rate of system loss based on load density, sales mix, cost of service, delivery voltage and other technical considerations.

System loss refers to unbilled power caused by pilferage and physical loss of energy when electricity passes through distribution lines, which can be passed on to consumers as stated under Republic Act 7832 or the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994.