CEBU, PHILIPPINES — While the intention of removing system loss charges from consumers’ electricity bills remains, the Department of Energy (DOE) admits that it will require careful and gradual implementation to avoid power disruptions.
In a virtual press briefing on Monday, DOE Secretary Sharon Garin said the administration’s goal remains to stop passing system loss charges on to paying consumers, covering both technical and non-technical losses.
“The intention is to eliminate both,” Garin said, explaining that technical losses can only be reduced by upgrading aging power lines and distribution systems, while non-technical losses, such as electricity theft, require different interventions.
According to her, the directive of President Ferdinand Marcos Jr. has prompted power industry players, from generation to distribution, to assess their systems and identify the improvements needed to reduce system losses.
On non-technical losses, Garin stressed that consumers should not shoulder the cost of electricity theft.
However, she said the Energy Regulatory Commission (ERC) must first complete its assessment of more than 100 distribution utilities and electric cooperatives, as each faces different operational conditions.
Garin explained that immediately prohibiting electric cooperatives from recovering non-technical losses without giving them time to improve their systems may lead them into financial distress.
“If we implement it all at once without allowing them to improve their systems, some electric cooperatives may suffer losses or even shut down,” she said.
The DOE is also studying whether different policies may be needed for privately owned distribution utilities and electric cooperatives, noting that private utilities may have greater financial capacity to absorb additional costs.
Garin clarified that the system loss charge collected from consumers is not additional profit for distribution utilities. Instead, it covers electricity purchased from generation companies but lost before reaching consumers due to technical or non-technical reasons.
She said the government-created task force is evaluating possible mechanisms for shifting or absorbing these costs without adversely affecting the financial viability of power distributors.
“The President’s directive is clear, the paying consumer should not bear the burden of system losses,” Garin said, adding that the government needs sufficient time to complete its assessment and develop a well-planned implementation.
Written by Mitchelle B. Palaubsanon/FPL
