MANILA, Philippines—After hemming and hawing, Manila Electric Co. admitted Thursday that it was charging residential consumers up to 11 percent of its systems loss.

Still, Roberto Almazora, Meralco first vice president for customer services, said that the application of the losses—mainly from pilferage and problems of friction in the delivery of electricity from generators to end-users—was well within the allowable limit of 9.5 percent.

He said this was because it was being “averaged” among all customers, including residential and industrial power users.

Almazora’s admission came during the House committee on energy hearing, prompting Camarines Sur Rep. Luis Villafuerte to announce that he would seek a P30-billion refund from Meralco.

Villafuerte claimed that Meralco was actually charging residential and commercial consumers 14.4 percent of systems loss while those in industrial areas, 7 percent.

First Gas Power executives also told the hearing that Meralco paid the power producer for undelivered electricity, an admission that Villafuerte took as a confirmation of his earlier allegation that First Gas got P13 billion for “ghost deliveries” to Meralco.

But Richard Tantoco, First Gas executive vice president, indicated that the transactions adverted to in 2000 to 2001 were aboveboard because of the government-sanctioned “take-or-pay” provision in its contract with Meralco.

Meralco and First Gas are controlled by the Lopez family.

“First Gas did not engage in ghost deliveries. Napocor (National Power Corp.) should be man enough to explain this to the committee,” Tantoco said.

First Gas explained earlier all the contracted electricity was not delivered during the 2000-2001 period because Napocor transmission lines were still inadequate.

Charges up to 14.4%

Villafuerte confronted Meralco representatives with figures that showed the utility was charging its residential and commercial consumers 14.4 percent of its systems loss costs.

“We’d like to reiterate that the 9.5-percent cap is at the level of the distribution utility not to a particular customer segment,” Almazora said before the committee.

He said Meralco strictly complied with this cap under the Anti-Pilferage Act of 1994.

“When you average out the different charges from commercial, residential and industrial, that’s the one that shouldn’t exceed 9.5 percent. As far as residential is concerned we’re now at 11 percent,” he said.

Villafuerte said the law placed the cap on recoverable systems loss at 9.5 percent and said that this should be implemented across all consumer segments. He said the overcharge was equivalent to 30 centavos per kilowatt or P6 billion a year.

Evidence needed

He told Energy Regulatory Commission Chair Rodolfo Albano that he would go to the ERC to demand a refund. Albano said the ERC would welcome the petition but added that Villafuerte should bring documentary evidence to support his allegation.

Almazora told the committee that systems loss was greater in residential areas because of the amount of voltage that was needed to be decreased from the power plants.

“Power that comes from Napocor is 230,000 volts. That can’t go to a house. That house will be burned,” Almazora said. “When we go to the residential areas with lower voltage, that’s where the losses increase. Systems loss is at 11 percent,” he added.

Residential use costs more

In a telephone interview later, Almazora explained that the computation of systems loss charges for specific customer classes was based on the voltage level of the power delivered to these customers.

In the case of residential users, he said the systems loss charge was higher because power from the source—the generation facilities—had to pass through a higher number of Meralco transformers and longer stretches of distribution lines compared to industrial power users.

“The lower the voltage—220 volts in the case of residential users—the higher the systems loss. That’s very basic,” he said.

For industrial customers, he said the systems loss charge was only around 4-4.5 percent since power from the source travels a shorter distance to its destination.

“Most of these customers also have their own transformers so we don’t charge them anymore for that. Also, some industries are very near our delivery centers, so the possibility of systems loss is very low,” he said.

Computations approved by ERC

All formulas used to compute the different systems loss levels had been approved by the ERC, he said.

“The ERC’s formulas for computation have basis. These are not just numbers that they pull from the air. Our regulator knows what it is doing. Besides, this is also how many distribution utilities in other countries compute their systems loss charges,” he said.