By Danessa Rivera (The Philippine Star) | Updated February 23, 2018 - 12:00am
MANILA, Philippines — The Energy Regulatory Commission (ERC) has finally acted on expiring and pending contracts of seven power generating companies (gencos) as well as ordered a lower system loss cap effective May.
In a statement, the ERC said it has approved and issued certificates of compliance (COCs) and provisional authorities to operate (PAOs) to seven gencos—which have a combined capacity of 473.2 megawatts (MW) – after reconvening as a collegial body and resuming its regular meeting last Feb. 13.
Earlier this month, the Court of Appeals (CA) issued a 60-day temporary restraining order (TRO) on the suspension of the four ERC commissioners ordered by the Office of the Ombudsman in December 2017.
“It is imperative for a generation company to secure a COC or a PAO from the ERC prior to its commercial operation. The ERC recognizes the need for the immediate issuance of the COCs and PAOs to gencos in order to ensure a reliable and sustainable power supply especially that there is an upsurge in power demand during the summer months,” ERC chairperson Agnes Devanadera said.
The power regulator issued COCs to the 150-MW circulating fluidized bed (CFB) coal-fired power plant (Unit 3) of Panay Energy Development Corp (PEDC) in Iloilo City and the 25-MW Silay power plant of Silay Solar Power Inc. in Negros Occidental.
The COCs are required to commercially operate a power plant or other facilities used in the
Meanwhile, it issued PAOs to five gencos. These include the 135-MW Concepcion coal-fired power plant (Unit 1) of Palm Concepcion Power Corp. (PCPC) in Iloilo and the 10.944-MW Surigao diesel power plant of Nickel Asia Corp. (NAC) in Surigao City.
The agency also issued the PAO to two units of Lopez-led Energy Development Corp. These are the EDC Siklab Power Corp., which operates the 0.6144-MW Gaisano Balasan Solar Rooftop Project in Balasan, Iloilo and the 0.6144-MW Gaisano Oton Solar Rooftop Project in Oton, Iloilo.
The other EDC unit is EDC Bago Power Corp., which operates the 1.03-MW Bago Solar Rooftop Project at Gaisano Mall in Barangay Luna, La Paz, Iloilo City.
SMC Consolidated Power Corp. also received the PAO for its 150-MW Limay power plant (Unit 2) in Bataan.
Pending the issuance of the COC, the PAO may be issued by the ERC to enable a genco to operate its generation facility, which will be valid for six months. The six-month validity period shall be included in the five year-term of the COC.
Meanwhile, the ERC said the lower system loss cap to be charged by power distributors in the customers’ monthly electricity bill will be effective starting May 2018 billing.
“The lowering of the system loss cap is a move to bring down the power rates and help electricity consumers mitigate the impact of rising costs of commodities and services. This will encourage distribution utilities (DUs) to improve their distribution system and facilities so that they adhere to the newly-prescribed system loss cap,” Devanadera said.
The ERC issued resolution titled “A Resolution Adopting the ERC Rules for Setting the Distribution System Loss Cap and Establishing Performance Incentive Scheme for Distribution Efficiency,” which details the new distribution system loss (DSL) cap that can be recovered and charged by distribution utilities to its customers.
System loss refers to unbilled power caused by pilferage and physical loss of energy when electricity passes through distribution lines, which can be passed on to consumers as stated under Republic Act 7832, or the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994.
Private DUs, such as Manila Electric Co. (Meralco), shall charge a 6.5 percent DSL cap for 2018 and shall be gradually reduced annually until it reaches the 5.5 percent DSL cap level by 2021.
Meanwhile, electric cooperatives (ECs) are grouped into three clusters based on similar technical considerations and shall charge a 12 percent DSL cap in 2018. ECs shall charge within the range of 12 percent to 8.25 percent DSL cap until 2022.
The resolution also specified a particular methodology in computing for the technical loss and non-technical loss or pilferages.
DUs’ electricity usage shall be treated as an operation and maintenance expense of the DU under the appropriate rate-setting methodology.
The ERC also devised a performance incentive scheme (PIS) to motivate the DUs to reduce the technical and non-technical losses in their distribution systems.
Technical system loss is an inherent loss in the physical delivery of electricity while non-technical system loss is a result of pilferage, human error like tampering of meters and erroneous meter reading.
“The ERC is mandated to study and update the distribution system loss caps charged by the distribution utilities to electricity consumers. The newly-prescribed system loss cap is a by-product of a well-thought study taking into account the relevant technical criteria and will promote the Distribution Utilities’ efficient operation and service. The ERC will keep on looking for measures to bring down the electricity rates which are considered as among the highest in Asia,” Devanadera said.