“It is not the consumer’s fault that a system loss occurred.”
This was one of the statements made by the current President of the Philippines during the State Of the Nation Address (SONA) 2026, which drew a standing ovation as he called for the removal of system loss charges from electricity bills.
Many welcomed the reassurance of hearing that problems of an ordinary Filipino are being addressed by the President.
However, it also poses questions:
- Does calling it out automatically lead to a solution?
- Can the charges be removed immediately just because the President has expressed it?
- Is the process really that straightforward?
Hidden Costs in Your Electric Bill
An electric provider’s system loss refers to the electricity that is lost before it even reaches consumers.
These losses can be technical, such as energy dissipated through transmission lines, transformers, and aging infrastructure, or non-technical, including electricity theft, illegal connections, faulty metering, and billing inefficiencies.
For a typical household, usually served by Meralco, with an electricity bill of ₱3,000, around 5% or about ₱150 is attributed to system loss. Over the course of a year, this can total to about ₱1,800 per household.
The amount could also be higher for customers under electric cooperatives, and without enough government support, some non-profit electric cooperatives may struggle or even face bankruptcy.
Department of Energy (DOE) Secretary Sharon Garin said that the complete removal of system loss charges could be achieved by 2027.
Garin further explained that the DOE, the Energy Regulatory Commission (ERC), and the National Electrification Administration (NEA) still need to assess more than 100 electric cooperatives and private distribution utilities to determine the level of investment required to reduce system losses.
Where Do the Surcharges Go?
According to the Energy Regulatory Commission (ERC), a significant portion of system loss charges is tied to generation costs, which distribution utilities pay to power suppliers.
A smaller share is allocated to the National Grid Corporation of the Philippines (NGCP), as electricity passes through transmission networks before reaching distribution systems.
This structure indicates that system loss is not a single isolated cost, but part of an extensive chain of expenses embedded within the power supply system.
Promise of Relief for Filipinos
President Marcos also emphasized that the government must first decide how these costs will be handled, and who will take responsibility, before removing system loss charges. Options being explored include the costs being absorbed by distribution utilities alone, whether to be shared with the government, or passed on to generation companies and NGCP.
The thing is, even if the cost is passed to generation companies (gencos), there is still a possibility that they will return it to the consumers through higher generation charges. Generation charges that already make up more than half of most electricity bills.
Meralco, the largest distributor of electrical power in the Philippines, stated that it respects the President’s direction and is open to conducting a discussion on possible amendments to the EPIRA (Electric Power Industry Reform Act), while also stressing out that technical losses are unavoidable in any power distribution system.
Meralco Executive Vice President and Chief Operating Officer Ronnie Aperocho also shared that the company has already invested heavily in modernization and efficiency improvements to keep system losses below the ERC’s 6.5% regulatory cap.
Aligned with this, it is not only about removing the charge but also improving the system itself. Power lines, substations, transformers, and metering systems need to be upgraded to reduce technical losses, and these upgrades require significant funding, subject to ERC approval.
Remedy for Filipino Households May Take Time
Reducing system loss will require long-term infrastructure improvements, which involve significant costs and implementation timelines. While these upgrades may eventually lower electricity costs by an estimated 5% to 10%, the impact will not be immediate.
At the same time, it is not that simple because there are laws involved, particularly the EPIRA. According to the ERC, system loss charges cannot just be removed since they are allowed under the current law, albeit governed by thresholds.
Under the current EPIRA framework, system loss charges are permitted, meaning they cannot simply be removed without legislative amendments. For this to happen, Congress would need to amend the law, which means going through both the House of Representatives and the Senate.
As of date, the Senate is also handling the impeachment case of Vice President Sara Duterte, which may cause delays in the legislative process.
The Department of Energy (DOE) has not given a definite timeline yet, but it suggested that changes may possibly happen within a year, before President Marcos’ term’s final SONA.
Balancing Reform and Reality
The call to remove system loss charges pins the spotlight on growing concern over rising electricity costs and the financial burden on consumers amid economic burdens. However, the issue opens up a bigger reality: reducing electricity expenses involves not only policy decisions but also structural, financial, and technical considerations.
Ultimately, meaningful relief for consumers will depend on how these factors are going to be addressed by balancing affordability, system efficiency, and the long-term sustainability of the power sector.
DOPAY as Partner in Managing Rising Costs
Life is hard these days, and as much as possible, we want every peso to count. Aside from high electrical bills, the common household still faces many other expenses to worry about.
Every time bills goes up, it is not only Filipinos in the country that are affected, but also overseas Filipino Workers (OFWs) who send remittances back to the country to support their families. Even a small increase in bills can already feel heavy in the pocket.
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