System loss a problem for entire power industry – Erwin Tulfo

MANILA — The burden of system loss should not rest on power distributors alone, but also on everyone else in the whole energy ecosystem, Sen. Erwin Tulfo said in the Aug. 20 hearing of the Senate Committee on Energy.

Tulfo used the second half of the hearing to ask distribution utilities, cooperatives, industry associations, and generation companies in turn what each was doing to bring system loss down.

Pressing for upgrades beyond the distribution network, he told the Department of Energy that the burden could not rest on distributors alone.

“Hindi lang po siya ang sasagot,” he said. “It will be passed down doon po sa pinanggalingan.”

(“They will not be the only ones to shoulder the burden. It will be passed on from the sources.”)

READ: ERC: Removing nontechnical system loss charges feasible

Meralco initiatives

A Meralco representative, Ronnie Aperocho, was called first during the hearing.

“We cannot avoid technical losses, but it can be minimized,” said Ronnie Aperocho, who set out the company’s program.

“All of these initiatives should be technically vetted, should be data-driven, and the cost-benefit would still be the bottom line —because we’ll be spending this much. But what would be the effect on the customers?”

Aperocho pointed out that Meralco had replaced silicon-steel cores with amorphous ones across its distribution transformers.

“Doon lang sa reduction sa core loss, 70 percent kaagad yung reduction,” Aperocho said. “Ang presyo nito kumpara sa dating standard na silicon steel, 3 percent lang yung increase sa cost. Pero in terms of the technical loss reduction, 14 percent.”

(“On the core loss reduction alone, there was a 70 percent reduction. The price of this, compared to the previous silicon steel, had a mere 3 percent increase. But in terms of the technical loss reduction, it was 14 percent.”)

Asked how far the conversion had gone, he answered: “Buong franchise po namin.”

(“Our whole franchise.”)

According to Aperocho, a procurement standard now applies to substation units as well.

“Pag ang efficiency ng power transformer mo is below 99.7 percent, hindi ka namin imbitahin sa mga bidding namin,” he said.

(“If the efficiency of your power transformer is below 99.7 percent, we won’t even invite you to our bidding.”)

He put the company’s 2025 technical loss at 3.39 percent. Asked whether the resulting savings are passed on to consumers, Aperocho said they were, but “very minimal.”

Other players

Visayan Electric Company described the same work at a different scale.

“Kung mga facilities natin yung very old, undersized, yun ang for us sa Visayan Electric, we’ve been upgrading our systems,” its representative told the committee, citing added substations and increased line capacity.

(“If our facilities are very old, undersized, that was what we were in Visayan Electric. We’ve been upgrading our systems.”

“Our system loss is below the cap, but we’re still ongoing because of the entry and expansion of customers.”

Davao Light and Power Company reported the same position.

“Through the years, we have maintained lower technical system loss as capped by ERC [Energy Regulatory Commission],” Allan Calago said. “And continuous po yung mga infrastructure projects namin for system loss reduction.”

(“And our infrastructure projects for system loss reduction are continuous.”)

Calago added that further capital projects had been prepared for filing.

On the issue of generation, First Gen Corp. drew a boundary.

“While system loss is not directly within the generation sector, as a power producer, we ensure that we operate most efficiently our power plants,” said Carlos Vega. “So that when we supply this to our different customers, we provide it at the most competitive cost.”

Asked about the condition of the transmission facilities his plants feed, he said coordination with the system operator had been regular, and they had no problems.

Metering emerged as the industry’s common instrument.

The Philippine Rural Electric Cooperatives Association (Philreca) told the committee it had been encouraging cooperatives to invest in advanced metering infrastructure, which would help minimise system loss “by automating the real-time data collection, detecting the illegal taps, especially the meter tampering, and identifying the damaged distribution lines.”

The approach, it said, would “stop the unbilled power usage and improve the overall grid efficiency” of the cooperatives.

The Association of Visayas Electric Cooperatives reported a different tool.

“Most of the electric cooperatives from the Visayas have now adapted or improved technology by embracing artificial intelligence because AI helps us in fast-tracking, identifying those accounts that have abnormal patterns instead of relying on reports from the stakeholders,” Virgilio Fortich Jr. said.

According to him, all but one of its members operate at single-digit system loss. The largest such program is Meralco’s, which signed a February supply agreement with Aclara Meters Philippines, a Hubbell subsidiary, for more than 72,000 smart meters beginning this year under a plan for roughly 12 million endpoints over a decade.

About 196,000 have been deployed so far.

Regulation issue

The Private Electric Power Operators Association pointed to regulation as part of the answer.

“We just want to commend the current ERC chair, because the CAPEX applications of the distribution utilities are now being resolved,” said Ranulfo Ocampo. “Like before, there was a big backlog, so medyo constrained yung mga utilities to implement their proposed projects for lack of ERC approval.”

He said he expected technical loss to fall as those projects proceed, while cautioning: “Yung nature of system loss, medyo dynamic yun — it depends on the load.”

(“The nature of system loss is somewhat dynamic — it depends on the load.”)

The ERC held a careful line of its own.

Recovery of system loss can be reduced to zero or prohibited outright as a matter of policy, ERC Chair Francis Saturnino Juan said.

But such a move should be conditioned on tariff resets, phasing, and an incentive scheme that actually operates, he pointed out. Cooperatives already absorbing part of their loss, he warned, could find that they would only speed up their closure if required to absorb all of it.

On value-added tax, Tulfo called removal the low-hanging fruit as the committee’s priority.

READ: Gatchalian: VAT on system loss can be removed without law

“Ito po siguro din ang ire-report po namin sa Malacañang, naalis po natin itong VAT na ito sa systems loss,” he added.

(“This will probably also be what we will report to Malacañang: We have removed VAT from system loss.”)

For his part, Senate President Gatchalian argued it would need no new legislation,

The ERC would promulgate its resolution on Aug. 26. /atm