Systems Loss Charges, Is This Justified? 5

[nightfox1925]

1.) In our electric bill (Philippines), I have noticed that
there are System Loss Charge in addition to the
transmission and distribution charges. I am presently
questioning our utility as why these technical losses
supposed to be paid in terms of percentages (of the
billed or consumed kW) by all residential consumers.
The utility company informed us that this is a common
practice in all utilities in the world which I am
doubting.

2.) Furthermore, we just discovered that part of the system
loss charges percentages also include the non-technical
losses like pilferages.

3.) Lastly, we also found out through some hearings that
the electrical distribution cooperatives charge back
their offices' electric consumption to the consumers in
the form of billing percentages.

Are these a common practice elsewhere?

Any comments and opinions are highly appreciated.

 

[cranky108]

Well sort of. The losses are typically not seprated out as another line item. Just as theft is not seprated as another line item. But they are included in the bill.
What is commonly seprated is a fuel cost adjustment, and a fee for meter-reading and adminstrative costs. And a seprate item for franchise fees and sales taxes.

But having the losses broken out as a seprate item would be nice to know how much that is.

 

[LionelHutz]

1. Yes - typically it is an adjustment on the kWh measurement.

2. Yes - They have to recover this loss somehow.

3. In some manner. The company has to make back the money it spends on electricity and wages and vehicles and insurance and so on and so on.

 

[UtilityDave]

I have never seen a loss charge broken out. I think it is a good idea though. Customers pay for the full cost of doing business anyway (that is the regulatory compact) and more transparency is a good thing.

 

[steelerfan28655]

As a utility, we do not charge a specific "loss" charge. We do however have a basic facilies charge based on the type of account. (Residential, Commercial, or Industrial). It covers meter reading, meter testing, line maintenance, tree trimming, and so on.
We also have an additional facilities charge if a customer wants oversized equipment for their service. Some industrial customers insist on extra transformer and station capacity. We pass the additional losses (transformer losses, extra capitol investment, maintenance costs, etc.) on to that customer, otherwise the rest of our customers would be paying for the peace of mind of one customer.

Happiness is a way of travel, not a destination.

 

[nightfox1925]

Thank you for all the information provided. I do hope some other fellows will provide their humble opinion on this subject matter. So this means, based from what I learned here, is that Systems' Loss charges and Utility kW consumption expenses are justified to be paid by the consumers...I was kinda hoping that such utility kW consumption should be part of their own operating expenses and should not be passed along to the consumers as losses (in which its the way its being portrayed in our bills) right. Furthermore, pilferages are utilities reponsibilities and not to be passed on to consumers..does it make any sense.

 

[jghrist]

I was kinda hoping that such utility kW consumption should be part of their own operating expenses and should not be passed along to the consumers as losses (in which its the way its being portrayed in our bills) right. Furthermore, pilferages are utilities reponsibilities and not to be passed on to consumers..does it make any sense.

All operating expenses will be passed on to the customers, including losses and energy purchased and not billed because of energy theft. Who do you think should pay the operating expenses? The widows and retirees (among others) who own the utility stock, have risked their hard earned savings to provide the capital to build the system, and depend on dividends to make ends meet?

 

[UtilityDave]

Every business must pass all costs to the customer. Failure to do so means they won't make a profit and therefor will go out of business. If all the costs added up become excessive the business can't compete and also goes out of business.

Utilities are rightly regulated. We have limits on how much we charge, what rules we can implement etc. In exchange, since we don't want utitites closing up shop, our rates are calculated to provide a reasonable rate of return which must cover all costs. I could go on here but the point is reasonable rate of return for a utility must cover all costs just like any other business.

In the case of utilities it is tempting to suppose that utilities aren't diligent about controlling costs, losses, pilferage and so on. As I mentioned before it is part of the regulatory compact.

This is why a loss charge is such a good idea. The more specific the charges you see the better your ability to police the utility. If you see a charge as excessive you can take it to the regulatory body for review. You may succeed in your own bill, or better still the regulator may investigate the loss levels across the board.

Regards

 

[nightfox1925]

Thanks utilitydave and jghrist for the further descriptions.