Tuesday, December 20, 2016

Senate eyes P3-B savings for Meralco customers



By Butch Fernandez-

THE Senate Committee on Energy is bearing down on Manila Electric Co. (Meralco) and other power distributors to further reduce multibillion pesos in “systems loss” blamed on pilferage and technical causes, the cost of which is being passed on to consumers.
Sen. Sherwin T. Gatchalian, committee chairman, estimated this could run up to P3 billion in Meralco’s franchise area, suggesting a possible refund mechanism.
Gatchalian confirmed over the weekend the panel had already asked the officers of power firms in a recent public hearing to further cut down systems loss to 5 percent, from 6.5 percent in 2015.
“In the span of 30 years they managed to reduce systems loss. They started with 21 percent, now 6.4 percent, but in other advance countries, like Korea and Thailand, 6 percent,” he says, adding “Singapore is close to 0, but if we look at the same geographical and customer profile, I think Thailand can be a comparative country, because they are hovering at 6 percent.”
The senator is convinced the power companies can actually still reduce it further, citing reports that in some of the electric cooperatives in other jurisdictions in the country, “their systems loss hover at 4 percent or 3 percent so it’s possible.”
“Our proposal is 5 percent, which can translate to savings of P3 billion just in the Meralco franchise area alone and that P3 billion will benefit their customers,” the senator added.
He said the committee is also open to the idea of allowing foreign-owned firms to invest in the power industry. “Actually, with generation companies, foreign companies can now own 100 percent, except renewable energy.”
The senator said if power firms succeed in reducing their systems losses from 6.5 percent to 5 percent, the consumers will save about P3 billion a year.
But to further reduce Meralco’s systems loss being passed on to its customers, Gatchalian was told that it would have to “invest around P2 billion worth” to improve their system.
He reported that a Meralco official clarified they still need to verify the initial estimate and will “do some more pencil pushing” and submit whatever findings they have to the committee.
“We want to see Meralco’s proposal on their new investment…their internal cost benefit analysis, investment versus how much systems loss that we can reduce and the impact to the consumers,” Gatchalian said.
As for the distribution utilities and electric cooperatives, Gatchalian said the Energy Committee is also keen to get their perspective on “how much they will spend for capital expenditures and its impact to their customers.”
“That is what we want to understand.  How do they plan to further reduce systems loss? What’s the impact on the consumers if they invest?” Gatchalian asked, adding that he expects to get further clarifications from the power firms at the next committee hearing.

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