After Marcos' SONA, Meralco urges caution on system loss reforms

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

MANILA, Philippines — Power concessionaire Manila Electric Co. warned that changes to rules on system loss charges should consider how they could affect the operations and long-term infrastructure planning of power utilities.

Meralco issued the statement after President Ferdinand Marcos Jr. called on Congress to amend the Electric Power Industry Reform Act, or EPIRA, to stop utilities from passing system loss charges and the value-added tax on those charges to consumers.

“We believe it is important to recognize that system loss is not unique to any distribution utility but is a common operational aspect of the delivery of electricity, which affects the entire power industry,” Meralco said.

System loss refers to electricity lost in the process of transmitting and distributing power to consumers, including technical losses from the operation of the grid.

Meralco said that despite continued investments in facility upgrades, network modernization and loss-reducing technologies, a baseline level of technical loss remains unavoidable in running an electric grid.

The company said these operational upgrades have allowed it to keep its system loss below the 6.5% ceiling set by the Energy Regulatory Commission.

Impact on utilities

Meralco said it was open to discussions on possible reforms, but said these should also take into account the ability of distribution utilities and electric cooperatives to operate, invest in infrastructure and maintain system resilience.

“We look forward to productive discussions which we hope will carefully consider the impact of reforms on the operations and sustainability of distribution utilities,” Meralco said.

During his fifth State of the Nation Address on July 27, Marcos urged Congress to immediately amend EPIRA to bar utility companies from passing system loss charges and the corresponding VAT to consumers.

He said the public should not be made to shoulder the cost of power losses.

DOE's clarification. Energy Secretary Sharon Garin later clarified that Marcos was proposing the removal of the system loss charge and the VAT applied specifically to system loss, not the entire 12% VAT on consumers’ electricity bills.

Sen. Erwin Tulfo, chair of the Senate committee on energy, has also filed a proposed Senate resolution seeking an inquiry into the policy allowing system loss charges to be passed on to electricity consumers under EPIRA.