Philippine Lawmakers Weigh Reforms on System Loss Charges

MANILA, Philippines — Lawmakers on Wednesday pushed for a measured review of the country’s system loss policy, saying amendments to the Electric Power Industry Reform Act of 2001 (Epira) should cut consumers’ costs without compromising power reliability. At an Aug. 5 Congressional hearing, solons discussed President Ferdinand Marcos Jr.’s directive to remove the system loss charge from electricity bills, focusing on consumer protection, regulatory oversight, electricity theft, utility investments and the realities of power distribution. READ: DOE: Scrapping ‘system loss’ charge may take a year Akbayan Party-list Rep. Dadah Kiram Ismula said the issue extends beyond Manila Electric Co. (Meralco) and affects electricity consumers nationwide. “While much of the concern today focuses on Meralco, this concern extends far beyond a single utility. Families, public facilities, and small businesses in the Visayas and Mindanao are also being shocked by their soaring electricity bills. This is a national consumer issue that demands urgent attention,” she said in a mix of English and Filipino. While acknowledging that technical system loss is unavoidable in power distribution, Ismula questioned why consumers should shoulder costs arising from inefficiencies. “Is it fair for consumers to shoulder costs arising from utility companies’ responsibilities, such as inefficiency, aging infrastructure and operational shortcomings? As a consumer, the answer, of course, is no,” she said, adding that reforms should make the energy sector “more efficient, more accountable and more fair to every Filipino consumer.” Cagayan de Oro Rep. Rufus Rodriguez echoed Marcos’ position that consumers should no longer shoulder system losses and called for amendments to Epira. He also asked the Energy Regulatory Commission (ERC) whether recoverable non-technical losses should be abolished. ERC Chairperson Atty. Francis Saturnino Juan said the commission supports reforms that would ease consumers’ burden but does not favor abolishing system loss recovery at this stage. He said technical system losses are inherent in power distribution, although the recoverable cap could be reviewed and lowered without compromising the financial viability of distribution utilities. On non-technical losses, Juan said reforms must balance consumer protection with utilities’ ability to invest in safe and reliable power networks. Bagong Henerasyon Party-list Rep. Robert Nazal also questioned why consumers continue to pay for non-technical losses. He asked the ERC and Meralco to disclose how much of the system loss charge comes from technical losses and how much from pilferage, while detailing efforts to reduce both. Juan said Republic Act No. 7832 and Section 43 of Epira provide the legal basis for recoverable system loss. He noted that the law does not distinguish between technical and non-technical losses, both of which are recoverable subject to ERC caps. Meralco said it has consistently kept system loss below the regulatory cap through network modernization, anti-electricity pilferage operations and its System Loss Management Program. The utility said these initiatives have generated substantial customer savings, while non-technical losses now account for less than 1 percent of total system loss. It added that it continues to deploy smart meters and other technologies to curb electricity theft and improve efficiency. Energy Secretary Sharon Garin, meanwhile, sought more time to complete a comprehensive assessment before finalizing policy changes. The Department of Energy (DOE) will convene the ERC, the National Electrification Administration (NEA), private distribution utilities and electric cooperatives to craft an implementation plan for the eventual removal of the system loss charge. READ: Marcos wants electricity system loss charges scrapped Garin said Marcos was right that consumers should not shoulder losses caused by inefficiency, but stressed that reforms must also preserve the financial viability of distribution utilities and electric cooperatives. NEA Administrator Antonio Almeda likewise said government subsidies are not a sustainable long-term solution. He proposed expanding the agency’s loan and equity fund to finance meter installations, noting that inadequate metering contributes to non-technical losses, including electricity theft, while many electric cooperatives lack the capital for such investments. The hearing followed Marcos’ State of the Nation Address call to remove the system loss charge. With several bills pending, lawmakers said consultations with regulators, utilities, electric cooperatives and consumer groups will continue as Congress crafts reforms aimed at lowering power costs. /mcm