The Department of Energy (DOE) says it will hold a series of meetings with other government bodies to carry out President Marcos’ order to scrap systems loss charges and their corresponding value added tax, a move meant to bring down electricity costs for all consumers. This pertains to power that does not reach end users, split into unavoidable technical loss from natural energy flow through lines, and preventable non-technical loss such as theft and illegal connections. Current allowed limits vary: 6.5 percent for private distributors, 8.5 percent for direct grid suppliers, and over 10 percent for off-grid and lower-rated electric cooperatives. Energy Secretary Sharon Garin noted that more than 100 cooperatives and private utilities need individual assessment, with the process likely taking up to a year or until the next State of the Nation Address, as some operators will need to upgrade equipment to cut unnecessary losses.
Meralco, the country’s largest power distributor, reported its latest 12-month systems loss average 5.72 percent, below the national cap, and expressed support for the policy direction while noting that some technical loss is inherent to power delivery. It added that sustained investments in network upgrades have kept its rates compliant, and called for reforms that balance consumer savings with distributor ability to maintain reliable service. The Energy Regulatory Commission also backed the plan, vowing to protect both consumers and the long-term viability of power firms. The Philippine Rural Electric Cooperatives Association supported removing VAT on systems loss fees, but said full elimination of the charge is only feasible if the government provides dedicated subsidies, warning that rural networks face higher unavoidable losses due to geography and cost recovery rules. Garin confirmed that funding arrangements will be part of upcoming inter-agency discussions.
The DOE added that the same careful planning will apply to securing power for the proposed Pax Silica hub in New Clark City, Tarlac – a 1,620-hectare project seen as a major boost to the country’s artificial intelligence and advanced manufacturing sectors, projected to generate P180 billion in yearly revenue and nearly 200,000 jobs. Officials said any power supply arrangement, whether using on-site generation or planned transmission upgrades, must not disrupt service for existing consumers. They noted that long-term commitments from locators will be critical to encourage power firms to invest in new facilities, as such projects require around 20 years to recover costs.
