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Monday, August 18, 2008
Veco to lose P100M on system loss cap
MANILA -- Visayan Electric Cooperative (Veco) stands to lose P100 million once the draft resolution issued by the Energy Regulatory Commission (ERC) reducing the system loss cap is approved and implemented.
Erramon Aboitiz, president of Aboitiz Power Corporation and the owner and operator of Veco, said the distribution utility's (DU) current system loss cap is within the 9.5 percent level, and reducing it to eight percent will result in loss to distribution utilities and electric cooperatives.
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"Veco's system loss now is at 9.5 percent. If (the cap) is 8 percent, that's a P100-million impact on us," Aboitiz said.
Veco is the largest distribution utility in Cebu.
Aboitiz also said that a big chunk of their system loss cap is due to pilferage.
According to Aboitiz, instead of looking at the system loss, the ERC should also examine other aspects to be able to lower power rates.
"One cannot just look at the system loss. You can reduce system loss by investing, but when you invest, you have to make a return," he said.
One possible alternative, Aboitiz said, is the possibility of giving incentives to DUs and there should be no difference between the level of system loss of the DUs and electric cooperatives.
"Let businesses figure out how to reduce those losses then give incentives. When you give incentives, you start seeing what people can do. For me, it's better to give incentives to companies to reduce system loss," Aboitiz said.
Early this month, ERC's newly appointed chairman Zenaida Ducut ordered the lowering of the system loss cap to bring down the cost of power in the country which is burdening many Filipinos as a result of the skyrocketing prices of fuel in the international market.
In the draft resolution, the ERC said the electricity consumption of a DU must be treated as an expense and not as part of the system loss.
The draft resolution also lowers the maximum recoverable rate of system loss from the existing 9.5 percent to eight percent for private DUs (or PUs) and from 14 percent to 11 percent for rural electric cooperatives (ECs), based on the total kilowatt-hour (kWh) generated, purchased and distributed.
The existing system loss caps of 9.5 percent for PUs and 14 percent for ECs have not been adjusted since 1999 for PUs and 2000 for ECs, added Ducut.
Since they are mandated to fast track the resolution of the system loss cap, public consultations had been scheduled by the ERC.
The first consultation is slated on August 26 at 9 a.m. for DUs and consumers based in the Visayas and Mindanao at the National Transmission Corporation (Transco) office in Banilad, Cebu.
The second would be on September 3 also at 9 a.m. for the stakeholders based in Luzon. It will be held at the ERC Hearing Room, 15th Floor, Pacific Center, San Miguel Avenue, Pasig City.
"I urge stakeholders of the electric power industry, especially the DUs and the consumers, to attend the public consultations in order to have spirited discussions of the issues pertaining to the charging of system losses, which surely will help the ERC in making its final determination," Ducut added.
Like Aboitiz, distribution giant Manila Electric Company (Meralco) is also opposing the possibility of lowering the system loss cap, as this would greatly affect them.
"For Meralco, we have estimated our technical loss is only six percent or even below, so of the 9.65-percent system loss, six percent of that is technical and the 3.65 percent represents non-technical loss (pilferage)," said Jesus Francisco, Meralco president. (MSN/Sunnex)
For more Philippine news, visit Sun.Star Manila. (August 18, 2008 issue)
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