Consumers will start seeing savings from the lifted value-added tax (VAT) on allowable system loss charges in their November electricity bills, the Energy Regulatory Commission (ERC) announced Wednesday.
ERC Chairman Francis Saturnino Juan explained the savings vary per household, tied to individual power use, applicable utility system loss caps, and generation costs. On average, households consuming 200 kilowatt hours (kWh) monthly may see bills drop by roughly P20. Higher consumption means bigger savings, as the VAT exemption applies directly to the system loss amount being charged.
System loss refers to energy lost during delivery due to equipment quality, human error, or pilferage—a cost currently passed to consumers by distributors and cooperatives, then remitted to generators. Last month, the ERC formally approved a resolution classifying the system loss charge as a government-mandated pass-through cost, not part of the gross sales of power generators, grid operator National Grid Corporation of the Philippines, or distribution utilities for VAT purposes. Only losses within ERC-set limits can be recovered from users; excess losses are absorbed by utilities themselves.
The move redefines the charge as cost recovery rather than sales revenue, removing the VAT layer. Beyond this relief, Juan noted the ERC continues to streamline approvals for power supply, ancillary services, and capital spending agreements—actions intended to drive long-term reductions in power costs for consumers and fairer financial treatment for industry players.
