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 on Monday, Marcos said consumers should no longer shoulder charges arising from system losses, including the value-added tax imposed on them.

“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. 

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 No. 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 Manila Electric Co. (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.

“Not only Meralco but the entire power industry, including NGCP (National Grid Corp. of the Philippines), because there are transmission losses too. No utility will be spared,” Aperocho said.

The NGCP, however, clarified that it does not charge consumers for transmission technical system losses.

NGCP said technical system losses are the unavoidable loss of electricity as power flows through transmission lines, a physical phenomenon experienced by all power systems. 

It said these losses are minimized through investments in equipment such as capacitor banks and static synchronous compensators. 

The grid operator added that non-technical system losses stem from illegal connections, electricity theft, and jumper lines, which occur at the distribution level and are addressed by distribution utilities, not NGCP.