Getting Lost with System Loss

The Energy Regulatory Commission (ERC) is calling for comments from various stakeholders on a new resolution they are proposing on reduction of distribution system losses incurred by Distribution utilities (DUs) which are Private Utilities (PUs) and Electric Cooperatives (ECs) in their operation of their service areas. Figure below is an extraction from the ERC document on the resolution.

From the illustration, the regulated system loss caps have been long withstanding for about eight years. The 9.5% and 14% loss caps for PUs and ECs respectively, are about to celebrate their ninth birthday until this new resolution on system loss caps reduction which is aimed to be implemented in January 2009 billing. The proposed 8% cap on the PUs might be tight since presently MERALCO operates its vast distribution system following a 9.5% loss policy. There are other PUs but benchmarking with MERALCO is a sure test if the other PUs can comply with the proposed 8% cap. The proposed 11% system loss cap on ECs is a product of National Electrification Administration (NEA) media declaration on system loss saying that by 2009 the national average for system loss for ECs will be 11%. The 2006 NEA scorecard does not report this 11% but points that about 53 out of a total of 84 ( I thought there are total of 98 ECs) ECs comply perfectly with system loss reduction.

Reduction of system loss caps always provide good benefits for both consumers and the electric distributor, there is no doubt on this and the currently applied caps should have been in Grade 3 in the present school year. But giving pressure to the DUs to comply within five months can be challenging. Given the facts for both PUs and ECs, the proposed resolution will be an expected regulatory debate in the ERC hearings. Aside from decreasing system loss, DUs look into improving system reliability and quality of supply in their planning and operations which I believe are of equal weight with system loss. If this resolution is implemented, DUs might get lost with reducing their system loss.