Philippine Power Industry Warns of Collapse Over President's System Loss Charge Directive

MANILA, Philippines – Manila Electric Company (Meralco) chairman Manny V. Pangilinan warned that the Philippine power industry “may not survive” if President Ferdinand Marcos Jr.’s order to remove system loss charges from consumers’ electricity bills is carried out in full. Pangilinan argued that Meralco’s distribution rate had been unchanged since July 2015, and that recent increases in electricity bills came from other parts of the power supply chain. But Marcos’ directive could put Meralco and other utilities on the hook for system losses that consumers currently shoulder. And, according to Pangilinan, that could put them out of business. “If we’re not allowed to charge, we have to absorb the losses coming from the system loss,” Pangilinan said. “It’s a big bill for the industry,” he added, estimating that the cost could reach “tens of billions of pesos. We may not survive.” System loss is the difference between the electricity entering a power network and the amount eventually metered and billed to customers. Some of it is technical and unavoidable: electricity encounters resistance as it travels through wires and transformers, causing part of the energy to be converted into heat. But system loss also includes nontechnical losses such as electricity theft, illegal connections, and metering problems. At present, consumers shoulder system losses within limits set by the Energy Regulatory Commission. Meralco estimates that system loss can account for about 5% of your monthly bill. But in Marcos’ recent State of the Nation Address, the President said he wants consumers to stop paying the entire charge, including both technical and nontechnical losses and the value-added tax imposed on them. “The whole system loss is what was the directive of the President na i-remove,” Energy Secretary Sharon Garin said a day later, confirming the order. “Hindi partial, hindi ‘yung nontechnical lang, kun’di ‘yung buo po (Not just partially, not just the nontechnical, but the whole thing), technical and nontechnical.” Pangilinan said Meralco was “one with the President” in his push to lower electricity rates. “But first, we have to address [what] are the causes of the sudden rise in electricity,” he said, before pausing. “The system losses are still there. It’s not going to disappear. So, who’s going to pay for that?” Pangilinan said. This will be the headache that the Congress and regulators will have to address: who among the generators, the transmission operator, the distribution utilities, or even the taxpayers will absorb the cost? Despite the warning, Meralco is hardly on life support right now. The company’s gross revenue rose 16% to P283.7 billion in the first half of 2026, while reported income climbed 11% to P26.3 billion. The revenue figure does need a bit of context: a large portion reflects generation, transmission, and other charges that Meralco collects from customers and passes on to power suppliers and the grid operator, rather than income the company keeps. Meralco’s regulated distribution business accounts for only part of its total revenue, while its profits also come from power generation and other businesses. Pangilinan’s warning is likely less of an immediate forecast of corporate collapse and more like an aggressive opening position in negotiations.