As electricity travels through power lines, a proportion of energy is lost as heat due to the resistance in the lines.
The greater the distance the electricity travels and the lower the voltages of the line - the higher the losses are.
Loss factors are determined by distributors so that the reconciliation process can account for the existence of these and other losses.
To determine loss factors, distributors need to adopt a methodology to determine and allocate losses arising on their networks.
The loss factor review panel addressed concerns of affected participants about loss factor methodologies and the promotion and use of a standard methodology for technical and non technical loss factor calculation.
Types of losses
There are four types of losses within a network.
Technical losses - the difference between energy actually injected into a network and energy actually delivered to points of connection.
These losses can result from the inevitable physical loss of electricity in networks.
Non-technical losses - the difference between the volume of energy actually conveyed at points of connection and the volume of energy reported as conveyed at the same points of connection.
These losses can result from theft, metering errors and data handling errors.
Reconciliation losses - the difference between reported energy injected into a network and the reported energy extracted from the network. Reconciliation loss is the combination of technical and non-technical loss.
Unaccounted for electricity (UFE) - this is calculated from the difference between reported energy injected into a network and the reported energy extracted from the network after it has been adjusted for losses.