System Loss Charges | Is it Real, Or a Pathetic Excuse to Make Money?

What is System Loss Charge of your Electric Bill?

Recently, a friend posted a question on Facebook asking why she has “System Loss” charges in her electric bill. And I responded and explained to her why we are slapped with these charges from our Electricity Distribution Utility.

And in this article, I’ll share why there is a “system loss” charge in our electricity bill. 

And to be clear, the article only talks about electricity in the Philippines.

So what is the System Loss charge?

There are two major components of the power system that produce system loss. First is the transmission line, and second the transformer. When electricity passes through a transmission line, it creates the loss referred to as copper loss. And when electricity also passes through the conductor of a transformer core, it creates what we call core loss. 

So, the two system losses are core and copper loss.

And from the term itself, these two are wasted power, or power that was produced but not consumed or sold by the consumer. These losses are dissipated as heat along the length of the transmission line, and body of the transformer.

So why are copper and core losses charged to consumers?

Distribution Utilities(DU) buy Power from Generating Companies (GenCO)  or Power Plants. Let us say they bought a total of 10 Megawatts (MW). The 10-MW is then sold to consumers, that’s obviously used to power our gadgets and other electronic devices. But when the DU reconciled their meter, they realized that only 8-MW is metered by the connecting households.

They bought 10-MW, but only recorded 8-MW that will be paid by the consumer.  In this example, we have a 2-MW System Loss.

And since the Distribution company bought and paid 10-MW from the GenCo, the 8-MW metered by the households will be priced as 10-MW. The DU will do a little math. Then, they will distribute the cost of the losses to the total connected households. And finally, viola, you have the system loss charges in your electric bill.

For the copper and core loss, and in the point of view of a business, it should appear in our electric bill. Copper and core losses are an inherent occurrence when an electricity passes through a conductor. It happened because we wanted electricity in our homes. 

But, another source of System loss charge is power consumed by those who steal electricity. Thus, if you know someone who is illegally tapping electricity, report them immediately, because you are paying for what they are stealing.

It is sometimes annoying that we are seeing these variable figures at the bottom of our electric bill. But for the present set-up of the electricity market here in the Philippines, system loss charges will continue to be part of our monthly dues.

That is it. I hope my explanation about System Loss charge in your electric bill made sense. And if you have more questions, please do not hesitate to ask your local electrical engineer. And if this article brought value to you, please do share it on Facebook.