Philippines: Proposed Bill Seeks to Shift System Loss Burden from Consumers

A proposed bill in the Philippines seeks to prevent the costs associated with "system loss" incurred during electricity transmission and distribution from being passed on to end consumers. The bill suggests treating system loss as part of a distribution utility's operating costs, recoverable only to the extent prudent and reasonable, and solely through general distribution rates approved by the Energy Regulatory Commission (ERC), subject to prescribed efficiency benchmarks and loss-reduction standards. System loss refers to electricity lost during transmission and distribution, whether due to technical issues or illegal activities like the use of "jumpers" or pilferage. Current laws, including the Electric Power Industry Reform Act (EPIRA) and the Anti-Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act, permit distribution utilities to recover a portion of system loss from end-consumers through charges reflected in monthly electricity bills. However, Navotas City Representative Tobias Tiangco has filed House Bill 10273, the "System Loss Charges Abolition Act of 2026," arguing that consumers should not bear costs arising from inefficiencies and losses beyond their control. Similarly, Quezon City Representative Patrick Michael "PM" Vargas has filed a similar measure, proposing that only legitimate technical losses be passed on to consumers, subject to stricter and fairer limits. Vargas' bill also aims to reduce and recalibrate the allowable system loss cap, ensuring that operational savings and efficiencies directly translate into lower electricity bills. President Ferdinand "Bongbong" Marcos Jr. had previously called on both chambers of Congress during his State of the Nation Address (SONA) to amend the EPIRA to stop system loss charges, including their accompanying value-added tax (VAT), from being passed on to consumers. Speaker Faustino "Bojie" Dy III assured the public that the House of Representatives is ready to act on the legislative priorities outlined by President Marcos in his SONA. "The President has made it clear that bringing down electricity costs is a national priority, and the House stands ready to do its part. We will give due priority to the proposed Sariling Kuryente Act and the amendments to the EPIRA to ensure that consumers are no longer made to shoulder charges that should not be passed on to them," Dy stated. This legislative push aims to alleviate the financial burden on Filipino households grappling with high electricity costs, a significant component of living expenses in the country.