DOE, ERC back removal of system loss charges

MANILA — The Department of Energy and the Energy Regulatory Commission backed President Ferdinand R. Marcos Jr.’s call to remove system loss charges from electricity bills, while stressing that the proposed reform must preserve reliable service and the financial viability of power distributors.

Removing the charge could reduce monthly expenses for households and operating costs for businesses because consumers currently pay for a portion of the electricity lost before it reaches their meters.

The proposal, however, raises a major policy question for Congress: how to make utilities absorb avoidable losses while providing a fair mechanism for unavoidable technical losses inherent in transmitting electricity through distribution networks.

Neither agency provided an estimate of how much consumers could save or a timetable for passing the necessary amendments.

Marcos urged Congress to remove the system loss charge during his fifth State of the Nation Address on July 27, 2026, at the Batasang Pambansa Complex.

The ERC welcomed the directive as a consumer-focused policy reform intended to reduce unnecessary electricity expenses.

The independent regulator said it was prepared to work with Congress, the DOE, government agencies, distribution utilities, and other industry stakeholders on the regulatory changes needed to carry out the proposal.

The commission said the reforms should lower electricity rates without compromising the quality and reliability of electric service.

The ERC also said consumer welfare would remain at the center of its work through transparent and fair regulation.

The regulator emphasized that changes must account for the operational viability of distribution utilities, which are responsible for maintaining local power lines, substations, meters, and other equipment used to deliver electricity to customers.

System loss generally refers to the difference between the electricity entering a distribution network and the electricity sold to customers, after accounting for the utility’s authorized internal use.

Technical losses occur because of the physical characteristics of wires, transformers, and other electrical equipment.

Nontechnical losses can result from electricity theft, defective or inaccurate meters, billing errors, and other unaccounted consumption.

Current regulations limit the amount of distribution system loss that utilities may recover from customers, rather than allowing the unrestricted transfer of all losses to electricity bills.

The ERC has also used performance incentives and progressively lower loss caps to encourage private distribution utilities and electric cooperatives to improve efficiency.

The DOE said it firmly supported the President’s call for the immediate amendment of Republic Act 9136, or the Electric Power Industry Reform Act of 2001, particularly the law’s treatment of system loss charges.

The department published two statements supporting the President’s energy directives at 8:50 p.m. on July 27.

EPIRA restructured the Philippine electricity industry, established the ERC as an independent regulator, provided for the privatization of National Power Corp. assets, and created the framework for a wholesale electricity market and retail competition.

The DOE said that 25 years after EPIRA transformed the power sector, the country’s legal and regulatory framework must keep pace with changes in technology, electricity networks, and the broader energy landscape.

The department said modern policies should produce a power sector that is more efficient, transparent, accountable, and responsive to consumers.

The DOE said consumers should no longer bear avoidable system losses that utilities can reduce through better infrastructure, stronger operational discipline, modern technology, and more effective regulation.

The department said advanced metering systems, grid upgrades, digital technologies, and stronger measures against electricity theft should steadily reduce losses.

Efficiency gains from those investments should translate into meaningful consumer savings while improving the overall performance of the power sector, the DOE said.

“The President’s message is clear: every Filipino deserves electricity that is affordable, reliable, and secure. Our task now is to turn that vision into reality through decisive reforms, stronger investments, and sustained collaboration across government and the private sector,” Energy Secretary Sharon S. Garin said.

The DOE said amendments to EPIRA must balance consumer protection and affordability with the need for a financially sound, reliable, and resilient electricity industry.

The department said legislative reforms should continue encouraging investments in modern infrastructure while improving operational efficiency and strengthening regulatory oversight.

The DOE also called for greater accountability across the electricity value chain to ensure that Filipinos receive affordable, dependable, and high-quality service.

The department said it would work with Congress, the ERC, industry participants, and consumer groups on amendments that promote consumer welfare, energy security, and investor confidence.

The DOE said the reforms should also help build a more modern and future-ready power sector.

The system loss proposal forms part of a broader energy agenda outlined by Marcos during his address.

The President also proposed the Sariling Kuryente Act, which seeks to make rooftop solar panels and battery storage systems more accessible and affordable for Filipino households.

The DOE said the proposal, together with ongoing consumer protection measures, would allow households to participate directly in the country’s energy transition.

The department said energy security would remain a national priority following the government’s declaration of a State of National Energy Emergency in response to geopolitical challenges in the Middle East.

The administration’s energy-security measures include diversified fuel sourcing, strategic petroleum supply management, accelerated power generation, expanded storage capacity, and sustained investment in critical infrastructure.

The measures are intended to protect households and businesses from unstable energy supplies during global disruptions.

The President also called for a more diversified and future-ready energy mix.

The administration’s plans include expanding renewable energy projects, developing indigenous resources, growing the country’s natural hydrogen program, extending the operations of Malampaya, and responsibly reconsidering nuclear energy as part of the Philippines’ long-term strategy.

The DOE said those initiatives could strengthen energy independence, support economic growth, and reduce the country’s reliance on imported fuels.

The DOE Task Force for 200 Energy Projects is advancing almost 10,000 megawatts of additional power-generation capacity.

The task force is also advancing more than 1,700 megawatts of energy storage systems intended to improve grid flexibility and reliability.

The DOE said the projects would strengthen the power system and support the growing electricity requirements of millions of households and industries once completed.

The President also reaffirmed the Philippines’ commitment to regional energy cooperation through the ASEAN Petroleum Security Framework.

The administration plans to participate in the future ASEAN Power Grid, which is intended to increase regional electricity connectivity and energy resilience.

The DOE said it would coordinate with Congress, regulatory bodies, national and local government agencies, development partners, and the private sector in implementing the administration’s energy program.

“The progress we have reached over the past years has laid a strong foundation, but our work is far from over. Guided by the President’s vision, the Department of Energy will continue pursuing reforms that make electricity more affordable, strengthen our energy security, accelerate the development of clean energy resources, and modernize the infrastructure that powers our nation.

“At the heart of every energy policy is the Filipino people. We are committed to building a stronger, more affordable, and secure energy sector for every Filipino,” Secretary Garin stated.