Meralco Significantly Pares System Loss

P2.4-B Savings Generated At 7.35%
By MYRNA M. VELASCO
March 12, 2012, 1:45am


MANILA, Philippines — Power utility giant Manila Electric Company (Meralco) logged an all-time low system loss of 7.35 percent last year, prompting it to pass on savings of P2.4 billion which translated to reduction in the cost billed to customers.


The company said the 2011 system loss moving average was the lowest it ever achieved, beating the record of 7.68 percent it registered in 1973.


At that time, the utility firm had just been serving 650,000 end-users, whereas now, its customer base had already grown to 5.3 million and its service area also expanded exponentially.


“Meralco continues to reap benefits of its institutionalized system loss management programs resulting in further improvements in performance,” company senior executive vice president Oscar S. Reyes has noted.


System loss is one of the cost components being billed to all electricity ratepayers. Such will account for pilferage and losses in the system, which may cover both technical and non-technical, in the course of delivering that power to the end-users.


If a regulated power utility like Meralco breaches the cap of 8.5 percent, it will have to shoulder the additional cost and cannot pass that on to customers. But in an instance wherein its system loss had fallen below the cap, the utility firm has to plow back generated savings to its customers.


“With the system loss rate below the regulatory cap of 8.5%, a total of P2.4-billion savings in 2011 or a cumulative P5.2-billion savings over the last 4 years have been realized and passed on to the consumers,” Reyes said.


The company emphasized that the substantial reduction in its system loss had just been one of the tangible manifestations of its system and service improvements.


With it posting also an “all-time best” record on its operational metrics, Meralco can claim cost-rewards as prescribed under the performance incentive scheme (PIS) of the performance-based ratesetting methodology.


In the guaranteed service level prescribed by industry regulator Energy Regulatory Commission (ERC), Meralco noted that it “has beaten the service delivery standards,” emphasizing that its time-to-connect process “was shortended by an average 1.76 days.”


Service interruption frequencies, both forced and pre-arranged, were also reported to have improved substantially in the past year. (MMV)