Legal basis and related rule framework
- The Guidelines are issued pursuant to Section 43 (f) of Republic Act No. 9136 and Rule 15 Section 5 of its Implementing Rules and Regulations.
- The Guidelines also rely on Article 3.4 of the Philippine Distribution Code (PDC) for the classification of Distribution System Losses and the ERC authority to prescribe loss caps after notice and hearing.
- The guiding rule in Section 43 (f) of Republic Act No. 9136 replaces the earlier system loss cap concept under Section 10 of Republic Act No. 7832 by requiring ERC-determined caps based on factors including load density, sales mix, cost of service, delivery voltage, and other technical considerations.
- The Guidelines apply the Rules Governing Hearings Before the Energy Regulatory Commission to petitions for approval of system loss caps.
Policy objectives and method
- The Guidelines aim to promote transparency and accountability in all phases involving services provided by Distribution Utilities.
- The Guidelines aim to promote full disclosure of all transactions involving public interest.
- The Guidelines protect the public interest as affected by rates and services of Distribution Utilities and other providers of electric energy.
- The Guidelines establish a methodology for the segregation and calculation of Distribution System Losses.
Coverage and key definitions
- The Guidelines apply to all electric power Distribution Utilities, including:
- Privately-owned Distribution Utilities.
- Electric Cooperatives.
- Local government unit owned-and-operated Distribution Utilities.
- Entities authorized to own, operate and maintain distribution facilities within the economic zones.
- Other duly authorized entities engaged in the Distribution of Electricity.
- A Customer is any person or entity supplied with electric service under a contract with a Distributor.
- End-User means any person or entity requiring the supply and delivery of electricity for its own use.
- Distribution System is the system of wires and associated facilities belonging to a franchised Distribution Utility, extending between delivery points on the transmission/subtransmission system (or generator connection) and the point of connection to the End-User’s premises.
- Distribution System Losses mean the electric energy input (delivered to the Distribution System by the Transmission System, Embedded Generating Plants, other Distribution Systems, and User Systems with generating facilities) minus the electric energy output delivered to Users, for a specified billing period.
- Rate of Distribution System Losses means Distribution System Losses expressed as a percentage of total electric energy input to the Distribution System.
- Technical Loss is inherent in physical delivery of electric energy and includes conductor loss, transformer core loss, and potential/current coils in metering equipment.
- Non-Technical Loss is loss not related to physical characteristics/functions, caused primarily by human error (intentional or not), including energy lost due to pilferage, tampering of meters, and erroneous meter reading and/or billing.
- Administrative Loss is energy used by the Distribution Utility in the proper operation of the Distribution System.
- Energy means the integral of power with respect to time, measured in Watt-hour (Wh) or multiples thereof.
- Energy Input and Energy Output refer to energy delivered to the Distribution System and energy delivered to Users, respectively.
- Administrative Loss allowance covers electric energy consumption of connected essential electrical loads in specified facilities, subject to ERC approval.
- The Energy Regulatory Commission (ERC) is the regulatory agency created by Section 38 of Republic Act No. 9136.
- The following additional operational terms are defined: Burden, Distribution Development Plan (DDP), Distribution Development Plan, Distribution of Electricity, Distribution Utility/Distributor, Electric Cooperative, Embedded Generating Plant, Instrument Transformer, Load, Load Loss, Load Model, Metering Equipment, Network Model, No-Load Loss, Philippine Distribution Code (PDC), Three-Phase Load Flow, Transmission System, and User/User System.
Segregation, calculation, and monthly methodology
- Distribution System Losses must be segregated into Technical Loss, Non-Technical Loss, and Administrative Loss.
- Technical Loss includes Load and No-Load (Fixed) Losses in specified distribution components, including:
- Sub-transmission lines; substation power transformers; primary distribution lines; distribution transformers; secondary distribution lines; service drops; voltage regulators; capacitors; reactors; and all other electrical equipment necessary for operation.
- Losses in metering equipment, including the electrical burdens of instrument transformers, are treated as Technical Loss.
- Load loss due to electric energy pilferage is treated as Non-Technical Loss.
- Administrative Loss includes electric energy consumption of connected essential electrical loads in:
- Distribution substations; offices of the Distribution Utility; warehouses and workshops of the Distribution Utility; and other essential electrical loads of the Distribution Utility, subject to ERC approval.
- Total Distribution System Losses must be computed as the net of all electric energy input and all electric energy output for a specified billing period.
- Distribution System Losses must be calculated monthly and must coincide with the Distribution Utility’s billing cycle; the Utility must report the total number of days, hours, and the inclusive dates covered by the billing cycle used as the calculation period.
- Administrative Loss must be computed as the sum of the actual (metered) electric energy consumption of the essential loads used by the Utility’s facilities during the billing period.
- Technical Loss must be calculated as the sum of the hourly load loss and no-load (fixed) loss across distribution equipment/devices/conductors for the billing period.
- Technical Loss calculations must use Three-Phase Load Flow simulations using the appropriate Network and Load Models, capturing technical losses from incoming and outgoing delivery points from sub-transmission lines to service drops.
- For Technical Loss calculations, the delivery points of the Distribution System are the Metering Points (locations of metering devices).
- The Technical Loss associated with metering equipment is the electric energy dissipated in the burdens of metering equipment.
- The methodology appended in Annex A is made an integral part of the Guidelines.
- Non-Technical Loss is computed as the residual after subtracting Administrative Loss and Technical Loss from Total Distribution System Losses.
- Any electric energy loss recovered through anti-pilferage activities or any other form of recovery subject to ERC approval must be subtracted from Non-Technical Loss.
Recoverable loss caps and incentive structure
- The ERC prescribes system loss caps that a Distributor can recover from Users, and the ERC must specify three (3) caps:
- A cap on Technical Loss.
- A cap on Non-Technical Loss.
- A cap on Administrative Loss.
- The Technical Loss cap must be expressed as a percentage of electric energy input to the Distribution System and must consider both historical and forecasted Technical Losses using the methodology in Annex A.
- In setting the Technical Loss cap, the ERC may choose to adopt a grouping of Distribution Utilities based on their technical characteristics.
- The Non-Technical Loss cap must be expressed as a percentage of electric energy input to the Distribution System.
- If a Distribution Utility has a large Non-Technical Loss, it must submit to the ERC a proposed program for reducing Non-Technical Loss that specifies the costs and timeframe to achieve a targeted Non-Technical Loss level.
- The ERC may approve a declining value of the Non-Technical Loss cap to achieve targets over the program duration.
- The Administrative Loss cap must be expressed in kilowatt-hour (kWh) and must be based on the existing essential loads of the Distribution Utility.
- Expenses associated with any ERC-approved technical loss reduction program must be treated as part of the Distribution Utility’s capital and/or operating costs.
- The ERC may implement a mechanism to reward Distribution Utilities that achieve actual technical losses below their approved caps.
Petition, data, and approval procedures
- Every Distribution Utility must file a petition for approval of caps on the recoverable rate of Distribution System Losses.
- The petition must include proposed caps for:
- Technical Loss; Non-Technical Loss; and Administrative Loss.
- The petition must include segregated system losses for the year immediately preceding the year in which new system loss caps are sought.
- The petition must include estimates of segregated system losses for the succeeding five (5) years, using information in the Utility’s Distribution Development Plan (DDP).
- The petition must use the templates shown in Annex B and must contain the following information:
- ERC-DSL-01 Administrative Load Data.
- ERC-DSL-02 Customer Data.
- ERC-DSL-03 Billing Cycle Data.
- ERC-DSL-04 Customer Energy Consumption Data.
- ERC-DSL-05 Load Curve Data.
- ERC-DSL-06 Bus Data.
- ERC-DSL-07 Sub-transmission Line Data - Overhead.
- ERC-DSL-08 Sub-transmission Line Data - Underground/Submarine Cable.
- ERC-DSL-09 Substation Power Transformer Data - Two Winding.
- ERC-DSL-10 Substation Power Transformer Data - Three Winding.
- ERC-DSL-11 Primary Distribution Line Data - Overhead.
- ERC-DSL-12 Primary Distribution Line Data - Underground Cable.
- ERC-DSL-13 Primary Customer Service Drop Data - Overhead.
- ERC-DSL-14 Primary Customer Service Drop Data - Underground Cable.
- ERC-DSL-15 Distribution Transformer Data.
- ERC-DSL-16 Secondary Distribution Line Data.
- ERC-DSL-17 Secondary Customer Service Drop Data.
- ERC-DSL-18 Voltage Regulator Data.
- ERC-DSL-19 Shunt Capacitor Data.
- ERC-DSL-20 Shunt Inductor Data.
- ERC-DSL-21 Series Inductor Data.
- ERC-DSL-22 Energy Sales Data.
- ERC-DSL-23 Other Technical Data.
- The petition must be accompanied by Distribution System maps and diagrams showing the unique Identification (ID) of all connection points, electrical equipment, and line segments, and these maps/diagrams must be consistent with the template data submitted.
- The ERC may require additional information to evaluate the petition.
- Petitions must be submitted with technical, financial, and economic analysis in hard copies in legal format consisting of one (1) original copy and three (3) conformed copies, duly signed and verified by the Responsible Person of the Distribution Utility.
- Supporting data and templates must also be submitted in four (4) electronic copies in CD-ROM:
- Two (2) electronic copies must be in Portable Document Format (PDF) or any other format that cannot be altered.
- Two (2) electronic copies must be in either Text File format or Microsoft Excel File for review and simulation purposes.
- Petitions for approval of system loss caps must follow the Rules Governing Hearings Before the Energy Regulatory Commission.
Reporting, monitoring, and verification
- After ERC approves system loss caps, the ERC must require the Distribution Utility to submit quarterly system loss reports containing monthly actual and/or calculated values of:
- Technical Loss; Non-Technical Loss; and Administrative Loss.
- Quarterly reports must be submitted before the end of the month immediately following the quarter.
- The ERC must monitor and verify, on an annual basis, compliance with the approved recoverable rate of Distribution System Losses caps.
Administrative sanctions and compliance consequences
- Administrative sanctions in the form of fines and penalties must be imposed on any person found to have violated any provision of the Guidelines.
- The imposition of administrative sanctions must follow the Guidelines to Govern the Imposition of Administrative Sanctions in the Form of Fines and Penalties pursuant to Section 46 of Republic Act No. 9136.
Repeal, separability, and continuing effect
- All existing guidelines, or parts of them, that are inconsistent with these Guidelines are repealed, amended, or modified accordingly.
- If any provision is declared unconstitutional or invalid by final judgment of a competent court, the remaining provisions continue in full force and effect.