Another thing on system loss. . .

With the rising cost of energy, the Philippine government is thinking of lowering the system loss cost being charged by distribution utilities (DUs) and electric cooperatives (ECs) to their customers.

So many things have been said about system loss, from movie actress Judy Anne Santos' melting ice analogy to MERALCO's garment comparison. But there are other things that many people aren't aware of.

DUs/ECs determine their system loss by subtracting their energy sales to customers from their total energy purchase. Sometimes the delay in the processing of the energy sales, which may have something to do with meter reading error or accounting adjustment, make system loss higher or lower (even negative) than the actual figure.

Moreso, most utilities are using a 12-month moving average in charging system loss. Hence, even if a DU/EC breached the threshold level - 9.5% for DU and 14% for EC - chances are they could still pass through their costs in the long run, since actual rates would only be offsetting each other.

What I am driving at here is that, we may not be paying the actual figure or right amount of cost every billing month for system loss.

In addition, if a DU/EC buy directly in the wholesale electricity spot market (WESM) expect an increase in its technical system loss due to site specific loss adjustments (SSLA). This is due to the fact that the DU/EC's billing reference point would now be the market trading node, not the usual customer node being used as billing reference by the National Transmission Corp. (TRANSCO) and National Power Corporation (NAPOCOR).

In this regard, we may conclude that system loss is not just a physical thing that can be controlled; it is also an accounting item that is vulnerable to manipulation.