President Ferdinand R. Marcos Jr. wants electricity consumers to stop paying for system losses as he calls for an immediate amendment to the Electric Power Industry Reform Act (EPIRA) to prohibit distribution utilities from passing the cost on to households and businesses.

In his fifth State of the Nation Address (SONA) on Monday, Marcos said consumers should no longer shoulder charges arising from system losses, including the value-added tax imposed on them.

Stop passing the burden to consumers

“It’s time to stop passing the burden of system loss to consumers. This is being passed on to consumers and even imposed a value-added tax. Systems loss is not the consumers’ fault,” he said in Filipino.

“Therefore, we, their people, request — no, we demand the immediate amendment of the EPIRA and to prohibit charging systems loss against consumers, including the value-added tax thereon,” Marcos said.

System loss refers to the difference between the electricity delivered through the power network and the amount ultimately billed to consumers.

Technical losses

It includes technical losses that naturally occur as electricity flows through transmission and distribution facilities, as well as non-technical losses caused by electricity theft, illegal connections and meter tampering.

EPIRA, or Republic Act 9136, restructured and privatized the Philippine power sector in 2001.

Under the law, distribution utilities are allowed to recover a portion of system losses from consumers through a system loss charge reflected in monthly electricity bills, subject to caps set by the Energy Regulatory Commission (ERC).

Any losses beyond the ERC’s prescribed cap cannot be passed on to customers.

For Meralco customers, the system loss charge accounts for about 5 percent of a typical monthly electricity bill.

The utility’s 12-month moving average system loss stood at 5.72 percent in the first quarter of the year, down from 5.85 percent a year earlier.

Commenting on Marcos’ order, Meralco executive vice president and chief operating officer Ronnie L. Aperocho said any proposal to remove system loss charges would have implications across the entire power sector.