Senate approves bill on reducing system loss cap, energy efficiency

Senate approves bill on reducing system loss cap, energy efficiency

Two energy-related bills that will improve the country’s energy efficiency and conservation practices and reduce the amount of system loss passed on to power consumers have been approved by the Senate.

The two bills are the Energy Efficiency and Conservation Act of 2018 (Senate 1531) and the Recoverable System Loss Act (Senate Bill 1623).

Senate Bill 1531 would give a solid foundation for a comprehensive energy efficiency and conservation policy. This will mandate the efficient and wise use of energy resources and promote the development and utilization of both new and alternative sources of energy efficient technologies and systems.

“We are helping shape the consciousness of our consumers, including the government, through a change in the policy regime regulating energy consumption. The strategies detailed in this measure are all poised to provide not only savings for the government but also more money in people’s pockets,” Senator Sherwin Gatchalian said.

The bill would create a National Energy Efficiency and Conservation Plan that would define the national targets, details feasible strategies, and imposes a regular monitoring and evaluation system.

It would also mean the establishment of a National Energy Efficiency and Conservation Database that will collate all relevant information on energy consumption and the application of energy efficient and renewable energy technologies.

According to the Senator, if the country’s energy efficiency reaches half of Germany’s level – which is considered as one of the most energy-efficient country’s in the world – the country can have an estimated savings of around P1.6 trillion from 2018 to 2030 or an average of P126.4 billion annually.

If the country reaches a fully-similar energy efficiency standards like Germany’s, an estimated savings of P5.5-trillion from 2018 to 2030 will be recorded. This means an average of P420-billion annual savings.

Apart from the aforementioned, an Inter-Agency Energy Efficiency and Conservation Committee will also be established to provide strategic plans to implement the Government Energy Management Program (GEMP) which is a program that will reduce monthly consumption of power and petroleum products by the government.

Meanwhile, Senate Bill 1623 targets to reduce the present system loss caps passed on to consumers’ electricity bills from 8.5 percent to five percent for private distribution utilities (DUs) and from 13 percent to 10 percent for electric cooperatives (ECs).

“Power consumers are being forced to shoulder excessive charges from these losses, which electric companies should be taking care of in the first place. Reducing the Systems Loss cap to 5% could make monthly savings for an average consumer of about P4.94, or P59.28 annual savings,” Gatchalian said.

Under this bill, the Energy Regulatory Commission will conduct reviews every three years to determine whether the caps should be reduced further based on load density, sales mix, cost of service, delivery voltage and other technical conditions.

The ERC will also establish a Performance Incentive Routine (PIV) for DUs to further encourage System Loss Reduction. It will also conduct an annual review of system loss charges to assure that only allowable costs within the cap set are being recovered.

In a report by World Bank in 2017, the Philippines has one of the highest average system losses in East Asia at 9.4 percent in 2014 versus countries like Korea with 3.3 percent and Singapore with two percent.

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