Meralco Chief Questions Who Pays If System Loss Charges Are Removed

Manila Electric Company (Meralco) chairman and CEO Manuel V. Pangilinan on Wednesday raised concern on who would shoulder the cost of removing system loss charges from consumers’ electricity bills. “It's a big bill for the industry because it cuts across generation, transmission, and distribution. The bill is too big for the industry to absorb all of it. So, there's got to be that discussion. It's going to impact the entire power industry in this country,” Pangilinan said. “It is not a small matter… So, who's going to pay for that? The industry? It's going to cost tens of billions of pesos. Will you not survive?” the Meralco chairman asked. In his fifth State of the Nation Address, President Ferdinand “Bongbong” Marcos Jr. called on Congress for the immediate amendment of the Electric Power Industry Reform Act (EPIRA) to put a stop to system loss charges, including its accompanying value-added tax (VAT), from being passed on to consumers. System loss is the difference between electricity generated by power plants and electricity consumed by and billed to end-customers. Simply put, as electricity travels far distances from power plants to homes and businesses, energy is lost due to both “technical” and “non-technical” factors. Technical factors, including electricity flowing through wires that generate heat, power passing through multiple transformers, and voltage and stability concerns in the power system, also cause minor losses. Non-technical causes, on the other hand, include electricity theft or illegal connections. The Department of Energy (DOE) said the National Electrification Administration (NEA) may provide loans to help electric cooperatives upgrade their facilities and reduce system losses amid Marcos’ call to remove system loss charges from consumers’ electric bills.–NB, GMA News