Philippines Task Force to Remove System Loss Charges from Electricity Bills

A JOINT TASK FORCE consisting of representatives from energy agencies and electric cooperatives is working on plans to remove system loss charges from electricity bills, the Department of Energy (DoE) said. In a statement on Thursday, the DoE said it will lead the team, whose other members will be the Energy Regulatory Commission (ERC), the National Electrification Administration (NEA), and electric cooperatives. President Ferdinand R. Marcos, Jr. had called for the removal of system loss charges and the resulting value-added tax from electricity bills during his fifth State of the Nation Address. According to the DoE, the task force will assess the technical, regulatory, and legislative work needed to roll out the proposed reforms. “Central to its mandate, the Joint Task Force will pursue reforms that protect consumer interests, improve operational efficiencies, and strengthen the long-term reliability of the Philippine power sector,” the DoE said. The system loss charge is part of the generation and transmission costs paid to power producers and the grid operator. It covers electricity losses from technical and non-technical factors like illegal connections. The Electric Power Industry Reform Act of 2001 allows the recovery of system losses from consumers, subject to caps to be set by ERC based on technical considerations. The joint task force’s technical recommendations will guide both chambers of Congress in drafting legislation that advances a more affordable, reliable, and resilient energy sector, the DoE said. Beyond legislative reforms, it will also pursue measures to reduce system losses at the source through improved operational efficiencies, stronger enforcement action against electricity theft, and the modernization of distribution networks. The DoE and ERC has also begun their discussions with Manila Electric Co. (Meralco), the country’s largest private electric distribution utility, to assess the company’s pricing structure. “As part of this comprehensive review, the DoE and ERC are rigorously assessing Meralco’s price structure to deliver fairer electricity bills for Filipino consumers,” the department said. Citing its consultation with Meralco, the DoE said the power distributor expressed its commitment to explore ways to adjust its operations to reduce electricity prices and ease the financial burden on households and businesses. The DoE and ERC are also working with NEA to assess the impact of the proposed reforms on electric cooperatives and distribution utilities. — Sheldeen Joy Talavera