Senate committee on energy chairman Sherwin Gatchalian requested several electric cooperatives and private distribution utilities to present the possible rate impact of lowering the system loss caps from 13 percent to 10 percent for electric coops, and from 8.5 percent to 5 percent for private DUs.
Gatchalian said the point of the proposed legislation was not to arbitrarily reduce the system loss, but to deliver savings to the consumers. “The end goal here is to deliver the savings,” he said.
Most of those who submitted simulations, including six ECs and 11 private DUs, showed that lowering the system loss to comply with the proposed caps would result in a net increase in retail rate of electricity.
Private DUs said complying with the 5-percent system loss cap could result in potential rate increase ranging from P0.133 per kilowatt-hour to P0.375/kWh. While the proposed cap for ECs would be higher at 10 percent compared to that of the private DUs, ECs still estimated that compliance would also increase in retail rates for customers.
Elmer Francisco, chief of the engineering division of Cagayan Electric Cooperative II, an electric cooperative serving 21 municipalities in Cagayan province, said “the net effect of lowering the system loss just to meet the proposed system loss cap is a rate increase which will be a burden to the consumers.”
Cagelco II’s simulation showed a net increase of P0.134/kWh to meet the 10-percent SL cap. Francisco said that there were other concerns in meeting the cap, such as going through the process of capital expenditure applications and the time needed to procure and implement the projects. Cagelco II thus recommended to maintain the current system loss cap at 13 percent.