Philippines Eyes Loans for Electric Co-ops to Cut System Losses, Lower Bills

The Department of Energy (DOE) in the Philippines is considering tapping the National Electrification Administration (NEA) for loans to help electric cooperatives upgrade their facilities and reduce system losses, a move that could lead to lower electricity bills for consumers. This initiative follows President Ferdinand Marcos Jr.'s directive to remove system loss charges from consumers' electric bills. DOE Undersecretary Rowena Cristina Guevara highlighted the necessity for capital expenditures (CAPEX) by electric cooperatives and distribution utilities to mitigate technical system losses. She noted that past approval processes for CAPEX requests by the Energy Regulatory Commission (ERC) were lengthy, prompting the DOE to explore faster funding mechanisms, including NEA's long-term financing options. "We also need to talk to the National Electrification Administration because it needs to provide loans or long-term financing so electric cooperatives can carry out system improvements," Guevara told reporters. System loss refers to electricity lost during the distribution process, stemming from both technical and non-technical factors. Technical losses are inherent to the transmission of electricity through power lines and equipment, including transformers. Non-technical losses, meanwhile, include electricity theft, pilferage, and illegal connections such as the use of "jumpers." The DOE estimates that households could see savings of up to 10% on their electricity bills once system loss charges are eliminated. However, full implementation is projected to take at least a year, allowing electric cooperatives and distribution utilities time to upgrade their facilities and acquire new equipment to reduce these losses. "At the end of the day, once technical system losses are reduced and non-technical system losses are eliminated or minimized, electricity prices will go down," Guevara stated. — MCG, GMA News