Cold comfort in darkness

Every month, millions of Filipinos rip open their electricity bills, glance at the total, and silently curse.

Now come the Bureau of Internal Revenue and the Energy Regulatory Commission, proudly waving Revenue Memorandum Circular No. 97-2026. The 12% value-added tax on allowable electricity system loss charges is officially gone. BIR Commissioner Charlito Mendoza insists that “every peso saved by consumers counts.”

Every peso counts, certainly. But let us not mistake an administrative aspirin for open-heart surgery.

MORE Power chief Roel Castro called it for what it is: “a certain percentage of a certain percentage.” It is not a 12% cut across your entire monthly bill. It is tax relief applied solely to the allowable power lost before it ever enters your home. You are still paying for the lost electricity itself. You are simply no longer paying a tax on phantom wattage.

Between January and September, the Visayas grid endured 96 yellow alerts and 33 red alerts. When manual load dropping kicks in and the refrigerator goes warm, saving five pesos on a line item is cold comfort. Chronic generation deficits force emergency measures and volatile spot-market reliance that dwarf whatever loose change the BIR just spared our pockets. A grid gasping for baseload capacity does not care about tax tweaks.

Yet, when the lights go out, it is rarely the idled power plant or the transmission lines that get pelted with rage. It is the local distribution utility.

Energy Secretary Sharon Garin offered an unusually candid dose of reality when she called distribution utilities “the least guilty” in this mess. She is right. Distributors cannot distribute what the grid fails to deliver. Blaming them for spinning blackouts ordered by the National Grid Corp. of the Philippines is like berating the mail carrier because the publisher never printed the book. They are saddled with strict system loss caps, absorb excess losses out of pocket, and now have 60 days to overhaul their billing layouts just to prove they are not profiting off uncollected VAT.

To be fair, unbundling that line item under ERC Resolution No. 26 brings honest accounting. Making system loss visible strips away decades of bureaucratic fog, allowing consumers to see precisely what inefficiency costs them.

The deeper evasion, however, belongs to Congress.

In his State of the Nation Address, President Marcos Jr. urged lawmakers to amend the Electric Power Industry Reform Act and outlaw passing system loss charges to consumers entirely. But a blunt, blanket ban misses the mark. You cannot legislate away the laws of thermodynamics. Current flowing through wire generates heat, and physics dictates that some technical loss in conductors and transformers is unavoidable. Bankrupting utilities by refusing to recognize engineering reality will only kill off grid investments and invite steeper compensatory rate hikes down the road.

The real failure of EPIRA is that it lumps genuine physical dissipation together with non-technical theft — illegal jumpers, tampered meters, and administrative leaks — into a single recoverable charge. Nothing natural about an honest household paying PHP 12 per kilowatt-hour to subsidize a syndicate’s pilfered power.

A rational reform would draw a hard line: allow tight, engineering-based caps for unavoidable technical losses, while outlawing the recovery of non-technical pilferage entirely. Make community theft a corporate risk, not a socialized consumer burden.

Instead, lawmakers stall, leaving executive agencies to stretch their statutory tape under the Ease of Paying Taxes Act to deliver what relief they can legally improvise.

So we celebrate pennies while the baseline burns. Until Congress rewrites EPIRA to separate physical reality from institutionalized theft, consumers will keep underwriting the grid’s rot — one VAT-free phantom kilowatt at a time.