The Department of Energy (DOE) is exploring ways to reduce the system loss rates charged to electricity consumers while Congress deliberates amendments to the Electric Power Industry Reform Act (EPIRA), offering a near-term option to help ease power bills before broader legislative reforms take effect.
The move follows President Ferdinand R. Marcos Jr.’s directive to eliminate both the system loss charge and the value-added tax (VAT) imposed on it, one of several measures aimed at lowering electricity costs.
Energy Secretary Sharon Garin clarified that the proposal specifically targets the system loss charge and the VAT applied to that component of consumers’ electricity bills.
“System loss and VAT on system loss only,” Garin said when asked which charges the administration intends to remove.
She acknowledged, however, that abolishing the charges altogether cannot be done administratively because EPIRA explicitly allows distribution utilities to recover system losses.
“It’s not that easy. It is in the law that there is a system loss charge,” Garin said. “To remove it, we need a law.”
Pending congressional action, the DOE will consult the Energy Regulatory Commission (ERC) and the National Electrification Administration (NEA) to determine whether the allowable system loss threshold can be reduced under existing regulations.
“In the meantime, we will look at possibly adjusting the rate to lower the rate,” Garin said, adding that regulators must also consider the operating conditions of distribution utilities and electric cooperatives, where a certain level of technical and non-technical losses is unavoidable.
The proposal reflects the government’s effort to deliver immediate consumer relief while preserving the financial viability of electricity distributors that continue to invest in network upgrades and system reliability.
In a separate statement, Meralco Executive Vice President and Chief Operating Officer Ronnie L. Aperocho said the utility supports discussions on EPIRA amendments and respects the President’s policy direction.
He noted that system loss is an inherent feature of power distribution despite continuing investments in grid modernization and loss-reduction technologies. Meralco said its system loss remains below the 6.5 percent ceiling set by the ERC and emphasized that reforms should balance consumer savings with the need for continued investments in resilient and reliable electricity infrastructure.
