By: Philippine Rural Electric Cooperative Association, Inc.
In a hearing by the House Committee on Good Government and Public Accountability, Congressman Jesus Crispin C. Remulla asked if it is true that some electric cooperatives’ system loss charge reach as high as 20%. Commissioner Agnes VST Devanadera answered positively for some cooperatives but added that most of the coops do not reach the cap set by the Energy Regulatory Commission.
For quick reference, only 5 of the 121 electric cooperatives reached more than 20% system loss as of 4th quarter of 2019; with 59 electric cooperatives having single-digit system loss ranging from 1.83% to 9.99%.
PHILRECA, the association of the 121 electric cooperatives, would like to put system loss incurred by distribution utilities in proper context.
Explaining System Loss
System Loss is inherent in the distribution of electricity. It is impossible – scientifically – to create or install a transmission or distribution facility without the system incurring any form of energy loss. 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.
In a Senate Committee on Energy hearing conducted last 2017, some distribution utilities presented a report and simulations if they were to be required to further reduce their technical losses to 5% (more than the cap allowed by the Energy Regulatory Commission on private distribution utilities) – Using 2017 financial parameters, Angeles Electric Corp. will need to spend P892 million, Cagayan Electric Power and Light Company will be needing P1.84 billion, and Meralco would have to spend a massive P65.53 billion.
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. And because CAPEX is a pass on charge to the consumers, this will only lead to power rate increases to customers.
It is for this reason that there exists an approved system loss rate where distribution utilities are allowed to recover from the electric consumers.
Compliance of the 121 Electric Cooperatives
In the 2019 Compliance Report on the Performance of Electric Cooperatives published by the National Electrification Administration, all 121 electric cooperatives were assessed on their compliance with technical standards and parameters, one of which is compliance to the 12% cap as imposed by the Energy Regulatory Commission.
As of the 4th quarter of 2019, the average level in system loss of all electric cooperatives was 10.16% – a figure well within the ERC cap of 12% for electric cooperatives. Of the 117 ECs assessed, 99 are within the system loss cap, 59 of which have single-digit level. Only eighteen (18) ECs or 15% exceeded the allowable system loss cap.
Five (5) ECs or 4.13% 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 Expenditures project due to regulatory requirements, peace and order situation, and other concerns. These underperforming ECs are all already under close monitoring by NEA and are subject to a series of discussions by all concerned stakeholders.
Assistance Extended to the ECs
PHILRECA, together with its other member-electric cooperatives, have been meeting with energy stakeholders like the Energy Regulatory Commission, Department of Energy, National Grid Corporation of the Philippines, members of the House of Representatives, and aggrupation of electric cooperatives with the intention of coming up with recommendations and solutions on how to address the concerns of these underperforming electric cooperatives.
Overall, however, electric cooperatives have been complying to regulation and standards set by government regulators on system loss as well as other technical parameters.
Together with all concerned stakeholders, PHILRECA and the 121 member-electric cooperatives will never cease to pursue total rural electrification in the most affordable, sustainable, and reliable manner.##
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