Former Bayan Muna Representative and Makabayan leader Carlos Isagani Zarate said that President Ferdinand Marcos Jr.’s call during his 5th State of the Nation Address (SONA) to stop passing systems loss charges and their corresponding Value-Added Tax (VAT) onto power consumers “will become another hollow sana promise if not back by real immediate action.”
Zarate emphasized that for this measure to provide genuine relief, the administration must “back its words by officially certifying the repeal as urgent.”
Zarate pointed out that removing the systems loss component—a charge that forces ordinary electricity consumers to pay for line losses and power theft incurred by utility companies—is far from a novel concept. Progressive lawmakers and consumer advocates have laid the legislative groundwork for this exact reform for over a decade.
“While Malacañang is finally recognizing what consumers have been asserting for years – consumers should not pay for electricity they never used, nor for the inefficiencies and power theft that distribution utilities ought to manage – what is needed now is action, not more words,” Zarate stated.
“Applause in the plenary is not enough. If the President is sincere in taking this burden off Filipino families, he must immediately certify the pending legislative measures as urgent. Political willpower—not rhetoric—will decide whether electricity bills actually go down,” Zarate said.
Bayan Muna’s campaign to unburden consumers from systems loss charges and VAT spans several congresses:
- March 2015: Then-Bayan Muna Representatives Neri Colmenares and Carlos Isagani Zarate filed proposals explicitly calling for the VAT exemption of the system loss charge component in electricity sales to bring down soaring power rates.
- October 2017: Under House Bill 1616, principally authored by Rep. Zarate, the House of Representatives approved on second reading the measure exempting system loss charges from VAT, proving that the legislative mechanism has long been viable and ready for enactment.
“The real test of sincerity now lies in execution. President amarcos should certify the necessary measure to amend or even repeal the anti-poor Electric Power Industry Reform Act (EPIRA) and other tax laws as urgent so Congress can pass them without delay,” Zarate concluded.
“Filipinos do not just need promises of relief; they need signed laws that bring down power costs permanently.”
Under ERC Resolution No. 20, Series of 2017, private distribution utilities, like Meralco and Davao Light (DLPC), are subject to a strict maximum recoverable feeder loss cap of 5.50%.
In contrast, electric cooperatives operate under higher caps ranging from 8.25% to 12.00% to accommodate the greater technical challenges of maintaining long-distance distribution lines across low-density rural areas.
Because utilities can only pass on their actual system loss or the ERC cap—whichever is lower—major private distribution utilities typically charge around 4.0% to 5.5% on monthly bills. In monetary terms, this translates to roughly ₱0.50 to ₱0.70 per kilowatt-hour (kWh) on residential bills (or about ₱100 to ₱140 for a household consuming 200 kWh per month) depending on monthly base generation costs.
System loss covers both technical heat dissipation in transformers and wires as well as non-technical losses like electricity theft, and any loss exceeding the ERC cap must be absorbed directly by the power company as an operational expense.#
