Energy stakeholders have expressed support for President Ferdinand Marcos, Jr.’s proposal to amend the 25‑year‑old Electric Power Industry Reform Act, while cautioning that eliminating system loss charges from consumer bills should not proceed without a clear plan for cost recovery.
Meralco, the country’s largest private electric distribution utility, has agreed to participate in discussions on the amendments but urges lawmakers to consider the impact of scrapping system loss charges, which are considered inherent to operating a distribution system.
The company’s executive highlighted that Meralco has maintained system losses below the Energy Regulatory Commission’s cap through investments in loss‑management, network modernization, and operational efficiency.
Meralco applies a 5% system loss charge to customers, a component of the generation and transmission costs paid to power producers and the National Grid. The charge reflects technical losses that remain unavoidable even with modernization efforts.
Reforms should enable utilities and electric cooperatives to operate efficiently, invest in infrastructure, and deliver safe, stable electricity service.
PHILRECA, the national association of 121 rural electric cooperatives, supports removal of system loss charges only if the government directly subsidizes these costs. The group argues that losses in rural networks stem from physics rather than inefficiency and that eliminating recovery would threaten cooperatives’ financial viability.
PHILRECA calls for a comprehensive review and a performance‑driven transition model, with feeder‑specific technical loss caps set by the ERC and government‑backed funding for grid upgrades and anti‑pilferage enforcement.
During his State of the Nation Address, President Marcos called on lawmakers to approve a bill that would remove system loss charges from consumer bills, noting that the charge covers losses from technical factors and illegal connections.
Under EPIRA, private utilities can recover system losses up to 5.5%, while cooperatives are capped at 8.25%; any excess must be shouldered by the utilities themselves.
The ERC Chair stated the agency is open to lowering the cap if justified by technical considerations, but emphasized that changes cannot be made unilaterally and that utilities must be prepared to sustain operations without the charge.
Energy Secretary Sharon Garin said that losses caused by pilferage or inefficiency should be absorbed by distributors, noting that some cooperatives experience loss levels as high as 16%. She added that the department is working with the ERC and the National Electrification Administration on how to implement the removal of system loss charges from power bills.
A policy analyst noted that scrapping system loss charges and value‑added tax would directly reduce households’ monthly electricity bills, pointing out that residential rates remain among the highest in the region.
A consumer advocacy group welcomed the proposed elimination of system loss charges, arguing that they are unfair and that consumers also bear high fuel costs due to reliance on imported coal and gas.
A think‑tank director warned that reforms should focus on deeper structural factors driving high electricity prices rather than overstating the benefits of removing a small portion of the bill.
