House Files Bill to Abolish System Loss Charges on Electricity Bills

The House of Representatives has filed a measure seeking to abolish system loss charges from electricity bills, protecting consumers from shouldering losses caused by factors within the control of distribution utilities. Speaker Faustino Dy and Majority Leader Sandro Marcos filed House Bill 10340, or the Systems Loss Charge Abolition Act, aiming to remove system loss as a distinct component of electricity bills. The bill asserts that consumers should be shielded from charges stemming from conditions within the utilities' purview, while still allowing for the recovery of costs genuinely essential for efficient electricity delivery. The legislative move follows President Marcos' call in his recent State of the Nation Address to abolish the system loss charge. Under the proposed legislation, distribution utilities would be barred from recovering disallowed system losses through various charges like wheeling, supply, metering, universal charges, or subsidies. The Energy Regulatory Commission (ERC) will be tasked with determining the limited portion of electricity necessarily consumed in the efficient operation of a distribution network that can be recovered as part of the distribution wheeling charge. The bill specifically prohibits passing on costs from illegal electricity use, power theft, and the theft or destruction of electrical infrastructure. Losses due to defective meters, billing and collection deficiencies, inadequate maintenance, inefficient operations, negligence, and other controllable causes would also be covered by this prohibition. However, the bill allows distribution utilities to retain the right to recover prudent and reasonable costs necessary for maintaining reliable service and financial viability. The ERC is mandated to implement the reform in phases over three years to safeguard consumers without disrupting electricity reliability or destabilizing well-managed utilities. The regulator will also establish minimum efficiency standards for distribution utilities. Majority Leader Marcos clarified, "This is not a blanket denial of legitimate costs. Utilities that operate efficiently may recover prudent expenses, but costs born of controllable losses must remain where responsibility belongs." In a related move, Dy and Marcos also introduced a bill to facilitate rooftop solar panels, battery storage, and similar behind-the-meter energy systems. This aims to allow Filipinos to generate and store electricity for personal use without facing regulations designed for commercial power producers. The bill seeks to amend the Electric Power Industry Reform Act of 2001 to differentiate between electricity generated for personal consumption and that produced for commercial sale. End-users operating behind-the-meter systems solely for personal use will not be classified as generation companies. Systems using certified equipment to prevent electricity from flowing into the distribution grid will be exempt from needing a certificate of compliance or prior ERC authorization. Distribution utilities will be prohibited from imposing prior approval, agreements, technical studies, meter replacements, or additional charges for qualified non-exporting systems, with owners only required to notify the utility upon installation completion. Systems capable of exporting to the grid will remain subject to interconnection rules, but utilities must process complete applications within 10 working days, with applications deemed approved if no decision is made within the timeframe. The Department of Energy (DOE) will be directed to promote behind-the-meter systems, remove administrative barriers, and improve access to financing and equipment. Furthermore, homeowners' associations and property managers will be barred from prohibiting installations on end-user-controlled property, subject only to reasonable safety conditions. Information Source: Philstar Nation