Proposals to overhaul the country’s system loss charges could simply shift—not eliminate—a multi-billion-peso burden that the power industry cannot afford to absorb, Manila Electric Co. (Meralco) Chairman Manuel V. Pangilinan warned on Wednesday.

As the government explores reforms to help lower electricity bills, Pangilinan said system loss is an unavoidable consequence of transmitting and distributing electricity, making it impossible to erase through regulatory changes alone.

“It’s a big bill for the industry because it cuts across generation, transmission, and distribution. The bill is too big for the industry to absorb all of it. So, there’s got to be that discussion. It’s going to impact the entire power industry in this country,” Pangilinan said.

He warned that eliminating or shifting the charges would not eliminate the physical losses that occur when electricity travels through power lines, but would instead leave someone else footing what could amount to tens of billions of pesos.

“It is not a small matter to simply just because you can raise the bill, but the system loss is still there. It’s not going to disappear. So, who’s going to pay for that? The industry? It’s going to cost tens of billions of pesos. Will you not survive?” he said.

Asked whether system loss could instead be fully embedded in generation rates, Pangilinan acknowledged it was one possible approach but said it would merely transfer the same costs from one segment of the industry to another.

“That’s one solution, but then if it’s all of the transmission loss end to end from the plant gate to our distribution,” he said.

Separately, the Department of Energy (DOE) said it is studying reforms to system loss charges following mounting public concern over high electricity bills.

Rather than simply reallocating the charges, Energy Undersecretary Rowena Cristina Guevara said the government’s priority is to reduce actual system losses by upgrading aging distribution networks, particularly those operated by electric cooperatives.

“We need to talk to NEA because they need to provide loans, or long-term loans, so that the electric cooperatives can make improvements to the system,” Guevara said.

She said the National Electrification Administration’s soft-loan program could be expanded with financing from private banks and multilateral development institutions, noting that distribution assets have useful lives of 20 to 40 years, making them suitable for long-term financing.

Asked whether NEA would guarantee such loans, Guevara said, “In a way, yes, kasi ang NEA ang administrator of our electric co-ops. They will set guidelines for how to do this reduction of system costs.”

She said lowering both technical losses from aging infrastructure and non-technical losses such as electricity theft remains the most effective way to reduce electricity prices.

“At the end of the day, when technical system loss is improved and if we can remove or minimize non-technical system loss, only one thing is expected to happen and that is the lowering of power rates. And that is the bottom line,” Guevara said.

Meanwhile, Energy Secretary Sharon S. Garin said the DOE is preparing measures that can be implemented immediately while broader amendments to the Electric Power Industry Reform Act (EPIRA) are being pursued.

“So, we have some things that can be immediately accomplished by the DOE while we’re waiting for reforms in the law, on the policies and the regulation. We can implement these as soon as we can to adjust the charges… We first need to assess the non-technical systems loss which includes electricity pilferage,” Garin said.

She added that while changes to the law are beyond the DOE’s authority, the agency will continue pushing reforms that would improve the system loss framework.

“So, it’s not within our control but we will help them as much as we could in having better reforms for the EPIRA, including the systems loss charges,” Garin said.