ARE ENERGY companies like Meralco that powerful to an extent that the government is willing to cover its corporate losses? Or would it be the consumers who’d eventually absorb the burden in the form of new taxes?
This comes as the government decided to allocate P7.5 billion to eliminate nontechnical losses arising from energy pilferage and illegal connections.
These questions arise after Energy Secretary Sharon Garin said on Monday that government will address nontechnical systems losses – or those caused by pilferage, billing issues and other nontechnical factors caused by inefficiencies of electricity distributors like Meralco and electric coops (in the case of provinces), with the bailout coming in stages.
“This system loss action plan will be reinforced by a broader package of policy and institutional measures. This includes stronger coordination with the Department of Energy (DoE), National Electrification Administration (NEA), Energy Regulatory Commission (ERC), electric cooperatives, and private distribution utilities on pilferage enforcement,” she said during a briefing that was reported by Business World.
The government has allocated P4 billion for the first phase to cut nontechnical losses by 25%. Another P1 billion each will be allocated to the next two phases, which target reductions of 50% and 75%, while P1.5 billion is earmarked for the final phase to eliminate nontechnical losses.
Garin said the government will explore various funding options, either through National Government funds or loans.
To achieve these targets, the program will focus on seven key areas: anti-pilferage enforcement, consumer education and information, education and communication campaigns, billing and collection efficiency, meter management and auditing, consumer database cleansing, institutional strengthening, and policy and regulatory reforms.
System loss is the difference between the electric energy delivered to the distribution system and the energy delivered to the end-users. The costs arising from electricity losses are charged to consumers.
Nontechnical system losses are the result of electricity theft and illegal connections, while technical system losses are unavoidable and occur because of the laws of physics.
President Marcos last July called for the removal of system loss charges in the bills of electricity consumers that led to skyrocketing rates.
DoE Undersecretary Rowena Cristina L. Guevara said nontechnical system losses are expected to be reduced by 50% by the time the President delivers his last SONA in 2027. This is later than the DoE’s earlier projection that the system loss charge could be scrapped from power bills before the next SONA.
Guevara said technical losses account for the largest share in the charges, with more than 6% of electricity distributed by electric cooperatives, compared with about 3-4% attributed to nontechnical losses.
“We will prioritize the nontechnical system losses first because those are the ones we can address quickly. There is not much analysis needed because meters with problems are easy to identify,” she said.
The DoE is set to craft a distribution development plan in coordination with the NEA, ERC, and electric cooperatives in a bid to increase efficiency and economically decrease technical losses.
The plan will cover the optimal routing and capacity of sub-transmission lines and primary feeders, as well as the optimal location and capacity of substations, secondary lines and capacitors.
The plan is expected to be completed in the first half of 2027 and submitted through the NEA to the ERC for approval in July 2027.
“It would take two to three years before we could minimize technical system loss,” Ms. Garin said.
REPORT POWER THEFT
Electricity consumers, who bear the cost of nontechnical losses, can now report suspected illegal electrical connections, jumpers, and tampered electricity meters through the eGovPH platform.
The DoE on Monday launched “Brigada Kontra Jumper,” a government initiative aimed at strengthening the fight against electricity theft and nontechnical system losses.
The agency said the initiative forms part of its broader System Loss Reduction Action Plan.
Meralco had been hyping in TV commercials that it had been charging and putting in jail those stealing electricity through jumpers and other modes of illegal connections. But such commercials had been on and off in recent years.
“Electricity theft is not a victimless act. Illegal connections and meter tampering contribute to losses in the distribution system, with legitimate consumers potentially bearing part of the cost,” Garin said.
“Through Brigada Kontra Jumper, we are bringing government, utilities, and consumers together to address this problem more decisively,” she added.