What would happen if the cap of system loss was lowered?
Senator Sherwin Gatchalian had the same question. Which is why he asked various electric cooperatives and private distribution utilities to look at the possible rate impact of system loss caps went down from 13 percent to 10 percent for ECs, and 8.5 percent to 5 percent for private DUs.
In a report posted by the Manila Standard, Gatchalian said that the purpose of the legislation was to deliver savings to consumers, not to arbitrarily reduce system loss.
“The end goal here is to deliver the savings,” Gatchalian said.
In the same report, it said that 11 private DUs and six ECs submitted simulations to the senator. Most of these showed that lowering system loss to meet the proposed caps would mean a net increase in the retail rate of power.
The private DUs said that compliance with the 5 percent system loss cap could result in a potential rate increase between 0.133 per kilowatt – hour to P0.375 per kwh.
“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,” Elmer Francisco, engineering division chief of the Cagayan Electric Cooperative II said.
In its simulation, CAGELCO II showed a net increase of P0.134 per kwh to meet a 10 percent cap on system loss. They recommend maintaining the current system loss cap at 13 percent.
Apart from the cap, Francisco said that capital expenditure applications and procurement and implementation of projects are other concerns.
