Bill to reduce system loss charges in electricity bills filed in Senate

Bill to reduce system loss charges in electricity bills filed in Senate

A law that aims to reduce the amount of system loss charges passed on to the consumers by electricity companies is being pushed in the Senate.

The Recoverable System Loss Act (Senate Bill no. 1623) aims to reduce the current system loss caps from 8.5 percent to five percent for the private distribution utilities (DUs) and from 13 percent to 10 percent for electric cooperatives (ECs).

The bill was filed by Senator Sherwin Gatchalian, who chairs the Senate Energy Committee.

The bill could result in net overall savings in retail electricity as much as P0.66 per kilowatt hour (kwh)  in some areas.

Gatchalian said that this will give real and immediate for consumers.

“For years now, the Filipino people have had to suffer the burden of outrageously high electricity costs. This measure is a crucial step toward alleviating this burden and improving the standard of living in the Philippines,” he said.

The Senator also called out the Energy Regulatory Commission (ERC) for failing to incentivize the improvement of the facilities and operations by distribution utilities to reduce system losses.

The system loss cap has not changed since 2008. With that, the bill requires the ERC review the cap every three years and figure out a performance incentive scheme to encourage system loss reduction.

The bill will also require DUs to give a report on their losses and computation of system loss charges to the ERC yearly. If companies fail to comply, it will subject to both ERC and DUs to administrative penalties.

System loss is the difference between electrical energy delivered to the different distribution system and the energy delivered to the end-users and other entities connected to the system.