Improved service level boosts Meralco savings by P100 million

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THURSDAY, 28 JULY 2011 19:11 PAUL ANTHONY A. ISLA / REPORTER

MANILA Electric Co. (Meralco) has saved P100 million in the first half of the year for meeting its service commitments to 4.9 million consumers, said Oscar Reyes, the power retailer’s senior executive vice president and chief operating officer. 

Reyes said Meralco was able to meet the guaranteed service level (GSL) provided under the performance-based rate (PBR) mechanism. “Our GSL performance is within the allowed limits and has generated P100 million in savings to Meralco,” Reyes said.

Reyes said Meralco would have paid out P100 million to customers for not being able to meet its service requirements. Close to 800,000 such incidents were reported during the period.

Under the PBR system, customers are compensated when distribution utilities are unable to meet performance thresholds set for duration and frequency of power interruptions, restoration time and connection time. 

Reyes said a total of five weather disturbances affected the company’s franchise area as of June 30, although year-to-date performance reflects a positive impact on Meralco’s reliability performance.

The average number of interruptions reported by customers this year improved by 10 percent compared with the same period last year.

“While we were confronted by the consecutive weather disturbances in the last two months, our system reliability and availability measured using interruption frequency and duration were at unprecedented levels,” he said.

Meralco said it is upgrading its distribution system with nine projects lined up for completion in the second half. These include the development of the New Calaba substation, expansion of the Diliman and Legazpi substations, and commissioning of four new 115-kilovolt subtransmission lines.

Reyes said Meralco also achieved a record system loss level of 7.48 percent during the six-month period, 1.02 percentage points lower than the regulatory cap set at 8.5 percent.

“Our system loss achievement translates to a cumulative savings for our consumers of P2.9 billion or an equivalent an equivalent P0.034 per kilowatt-hour from 2008 to  2010 when our actual system loss rates were below the cap set by the Energy Regulatory Commission. All savings are passed on to consumers,” Reyes said.