Meralco reports jump in system losses to 11.1% in ’04

Manila Electric Co. (Meralco) reported that its system loss as of end-2004 went up to 11.1 percent, higher than the 10.85 percent level in 2003.

Meralco president Jesus Francisco said the increase in the system loss level was expected "as a result of the difficulty of the times."

"When the cost of electricity is high, we expect power pilferages to go up," he said.

The higher system loss, he said, resulted to a corresponding unrecoverable purchased power cost of P2 billion, compared to P1.5 billion in 2003.

Francisco said the higher system loss was also partly attributable to the one-time One-Day Power Sales (ODPS) financial adjustment in Jan. 2004.

"When normalized, system loss for 2004 would have only been 10.96 percent, or a mere 0.1 percentage point greater than in 2003," he said.

The company expects its system loss to remain high due to the prevailing economic conditions, not to mention the impending additional rate hike of the National Power Corp. (Napocor) which could add about 90 centavos per kilowatthour (kwh) to electricity bills, as well as the proposed value-added tax (VAT) on power which could have an impact of about 70 centavos per kwh hike on electricity rates in the Meralco franchise areas.

But Francisco said the utility firm has been addressing the system loss problem.

"Nevertheless, intensified system loss reduction measures were undertaken last year such as focusing on distribution circuits with the highest losses, aggressive apprehension of squatter colonies resulting to illegal service connections, and improved detection activities," he said.

The Meralco official said, however, that said system loss showed signs of a declining trend in the second semester of 2004, and could continue in the first half of 2005.