Electric co-ops oppose proposal to end system loss charge
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Standing ovations greeted President Ferdinand Marcos Jr.'s call for Congress to amend the Electric Power Industry Reform Act (EPIRA) to remove system loss charges from consumers' electricity bills.
But the Philippine Rural Electric Cooperatives Association, Inc. (Philreca) said the proposal should be accompanied by a government subsidy to prevent financial losses among electric cooperatives.
In a statement, Philreca, the umbrella organization of 121 electric cooperatives and allied groups nationwide, said it supports the complete removal of system loss charges only if the national government directly shoulders the cost through a dedicated subsidy mechanism.
“System losses on rural distribution networks—arising from extended feeder lines and challenging terrain—are governed by the law of thermodynamics rather than inefficiency,” the group said.
Philreca also backed the president's proposal to remove the value-added tax (VAT) on system loss charges, saying consumers should not be taxed for energy that never reached their homes.
“Without a direct government subsidy, a total ban on system loss recovery directly violates Section 25 of EPIRA and will bankrupt non-profit ECs,” the group said.
Philreca added that if the government does not shoulder the cost, it should instead undertake a comprehensive review of the proposed prohibition.
The group urged Congress to adopt a performance-based transition model that includes feeder-specific technical loss caps to be set by the Energy Regulatory Commission (ERC), along with government funding for grid upgrades and anti-electricity pilferage measures.
Meanwhile, House Committee on Energy Vice Chair Rep. Edwin Ongchuan welcomed the president's call to amend EPIRA, saying the law should be aligned with the needs of the public.
Ongchuan has also proposed resolutions urging prompt government action to mitigate the impact of rising fuel prices in Small Power Utilities Group (SPUG) areas and to investigate electricity line rental charges that have contributed to high power rates in Eastern Visayas.
