MANILA, Philippines – Manila Electric Company (Meralco) chairman and chief executive officer Manuel V. Pangilinan on Wednesday questioned who would shoulder billions of pesos in electricity system loss costs if consumers are no longer required to pay system loss charges.
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| File photo | Courtesy: ABS-CBN News |
His remarks came after President Ferdinand Marcos Jr. called on Congress during his fifth State of the Nation Address to amend the Electric Power Industry Reform Act (EPIRA) and stop passing system loss charges, including the corresponding value-added tax (VAT), on to electricity consumers.
Pangilinan said removing the charges would have major financial implications for the entire power sector, including generation, transmission, and distribution companies.
“It's a big bill for the industry because it cuts across generation, transmission, and distribution,” Pangilinan said.
He added that the industry could not absorb the cost on its own because it would amount to “tens of billions of pesos.”
“Who's going to pay for that?” Pangilinan asked, warning that some companies “may not survive” if forced to shoulder the full cost.
He also stressed that system loss is an unavoidable part of delivering electricity rather than a sign of inefficiency.
“Any operation that involves transmission from point A to point B will involve some losses,” he said, explaining that electricity naturally encounters resistance as it flows through copper wires.
System loss refers to the difference between electricity generated by power plants and the amount ultimately billed to consumers, with losses caused by technical factors such as transmission resistance and transformers, as well as non-technical causes including electricity theft and illegal connections.
Earlier, Meralco executive vice president and chief operating officer Ronnie Aperocho said the company respects the President's policy direction but emphasized that system loss is a normal operational aspect of electricity distribution across the power industry.
The Department of Energy, meanwhile, said the National Electrification Administration may provide loans to electric cooperatives to help reduce system losses, while existing laws currently allow distribution utilities to recover a regulated portion of those costs through monthly electricity bills.
— The Summit Express
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