Press Release
May 15, 2008

Loren moves to stop utilities from passing systems loss to consumers

Senator Loren Legardademanded that corporations imbued with public interest like utilities should be made fully accountable for committing acts inimical to the people.

Chair of the Senate Economic Affairs Committee, Legarda filed Senate Bill 2289 that, when passed into law, would stop the passing on to consumers of the so-called systems losses from pilferage and inefficiency incurred by power companies.

"This bill seeks to introduce amendments to Republic Act 7832 to stop the absurdity of innocent consumers being made to pay for the criminal activities of some consumers and the inefficiencies of the utilities they are forced to deal with," Legarda said.

RA 7832 is otherwise known as the Anti-Electricity and Electrical Transmission Lines/Materials Pilferage Act of 1994.

Legarda said losses should be shouldered by power retailers because they are part of the risk of doing business, and because the retailers should be fully responsible in minimizing pilferage and losses from inefficiency.

"If they cannot pass systems losses to consumers, electric companies will be motivated to go after pilferers and to improve their systems to minimize naturally occurring losses," she added.

Legarda said she also proposes the expansion of RA 7832's coverage to include distribution lines and materials from those protected by the law against pilferage.

The senator will also seek increasing the fine for pilferage from P50,000 to a range of P100,000 to P500,000.

Systems loss accounts for at least eight percent of the bill of an average consumer or about 58 centavos per kilowatt hour (kWh). From 2003 to 2007, Meralco customers paid P84.6 billion in systems losses based on the 70.55 centavos systems loss charge per kWh.

Legarda said pilferage of electricity is doubly condemnable because of the soaring power rates and because it equates to billions of pesos in benefits to economic saboteurs.

Under RA 7832, electric utilities were allowed to pass on the consumers 15 percent of their systems loss, with the allowable percentage reduced through the years to the present 9.5 percent. The repeal of Sections 10 and 11of RA 7832 will stop this abhorrent practice.

Prior to the law, systems loss due to pilferage was estimated at roughly P6.6 billion, but losses due to electric pilferage still averages at a rate of 14 to 20 percent after RA 7832's passage.

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