President Ferdinand Marcos Jr.’s proposal to amend the Electric Power Industry Reform Act (EPIRA) and remove system loss charges from electricity bills is a political winner. After all, who wants to pay for power that never reaches the socket?
The applause—and the standing ovation—are understandable. The economics, however, is less straightforward.
System loss has become the villain of every electric bill. It is the line item consumers point to and ask, “Why am I paying for electricity I never used?”
Fair question. Wrong target.
Some losses are unavoidable. Electricity loses energy as it travels through transmission lines, transformers, and distribution wires. That’s physics, not poor management. Commercial losses—power theft, illegal connections, faulty meters—are another story. Those deserve tougher enforcement, not a free pass.
Here’s the catch: if Congress outlaws the system loss charge, utilities won’t suddenly stop losing electricity. Neither will they stop paying for it.
Like any regulated business, they recover legitimate costs. Remove one billing item, and those expenses will likely reappear somewhere else—perhaps folded into a higher distribution charge, a network recovery fee, or another tariff wrapped in language so technical it could put a lawyer to sleep.
The bill doesn’t disappear. It changes wardrobe.
If lawmakers are serious about reducing electricity costs, they should look beyond the most unpopular line item. Value-added tax accounts for about 9.4 percent of the power rate, while universal charges make up roughly 2.1 percent and the feed-in tariff allowance, which supports renewable energy projects, adds another 1.3 percent. Those charges deserve scrutiny, too.
The real reform is not hiding costs but deciding which ones consumers should legitimately pay.
Utilities should absorb inefficiency. They should relentlessly pursue electricity thieves. Regulators should demand world-class standards for technical losses.
But pretending the cost of moving electricity can simply be legislated away is like banning airline fuel surcharges and expecting planes to fly on applause.
Physics, unlike politics, doesn’t negotiate.
And neither do balance sheets.
