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Regulating power costs

The Energy Regulatory Commission has ordered electric cooperatives (ECs) to immediately reduce their systems losses to help curb rising electricity rates in the provinces.

A regulatory advisory of the ERC said around 44 percent of the country’s 121 ECs had passed on hefty energy charges to consumers while sharp increases from the previous quarter were observed among 22 ECs. These figures were based on the ECs’ residential rates for September last year.

The increase in electricity rates in the third quarter of 2021 was primarily attributed to the high cost of fuel – particularly coal – used to operate power plants.

However, the impact on the monthly billings could be mitigated by reducing the systems loss charges passed on to consumers. This refers to unbilled electricity or electricity lost due to pilferage or through the transmission and distribution process.

To compensate for systems losses, power distributors are authorized to pass on pat of the cost to consumers. The ERC advisory notes that some ECs have exceeded the 12 percent threshold for systems loss charges set by the ERC.

This, all ECs were advised to “strengthen and strictly implement” their respective systems loss reduction programs (SLRP). Accordingly, ECs must identify distribution system losses in their networks to determine the most effective SLRP.

The ECs were also advised to review their power supply agreements and renegotiate with their respective power suppliers to trim over-contracted power supplies, which will also help reduce power bills.

It is good to see the ERC at work, finding ways to provide relief to Filipino consumers who continue to be saddled by one of the highest power rates in the region. The system that allows ECs to pass on charges for systems losses which should have been be addressed at the source instead of being passed on the paying consumers who are in no position to do anything about those preventable losses has not improved efficiency and the quality of service, only increasing power prices at the our expense.

We hope that this current focus of the ERC and ECs on reducing systems losses does not let up until those losses are no longer a significant part of our electric bills that have a lot of room for improvement as far as the fair price we pay for power is concerned.*

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May 2022
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