The Energy Regulatory Commission (ERC) has thrown its support behind removing system loss charges from electricity bills, as President Ferdinand Marcos Jr. ordered in his State of the Nation Address (SoNA), but not in the way the Chief Executive wants.

In a study obtained by Daily Tribune, the ERC laid out the numbers behind the charge. It warned that scrapping it outright, without distinguishing between its causes, could push financially weaker electric cooperatives toward bankruptcy.

The ERC’s position sets up a potential clash with Malacañang over how far and fast the President’s SoNA directive should go, with electric cooperatives, many already operating on thin margins in the country’s poorest and most remote areas, caught in the middle.

Distribution utilities recovered P32.4 billion in generation costs tied to feeder-system losses in 2025 alone, the ERC said.

Of that, P25.6 billion came from technical losses, the unavoidable dissipation of electricity as it travels through wires and transformers, and the remaining P6.8 billion from non-technical losses, which are theft, pilferage and faulty metering.

The system loss charge lets distribution utilities recover the cost of lost power, which must still be purchased from generators at market prices, by passing it on to paying consumers.

That was the subject of President Marcos’ misgiving in his speech — that consumers should not pay for electricity they did not use.

In the address, Marcos called for Congress to amend the Electric Power Industry Reform Act to remove the system loss charge and the value-added tax attached to it from electric bills.

“Consumers should not be made to pay for electricity they did not use,” Marcos stated, which was met with applause from the audience, who were mostly the members of Congress.

P1.7-B loss absorbed

Feeder system losses accounted for six percent of the P542.4 billion in total generation costs booked by the country’s 124 reporting distribution utilities (DU) last year.

Not all of that loss gets passed on. DUs that exceed their ERC-set feeder loss cap must absorb the excess themselves. In 2025, that above-cap burden totaled P1.7 billion.

The ERC cautioned that absorption does not mean the cost disappears. Distribution utilities squeezed by above-cap losses often seek higher distribution rates in future reviews, the commission said, effectively shifting the burden back to consumers through a different line item.

Others delay the capital investments needed to fix aging lines in the first place, deepening the very losses driving up their costs, in what the ERC called a trap.

In the worst cases, cash-strapped DUs fall behind on payments to power generators and the network operator, National Grid Corporation of the Philippines, creating risk that ripples upstream through the sector.

The ERC also flagged its own blind spot — without feeder-level loss data, it has no reliable way to track how costs change after a DU absorbs them.