MORE Power chief welcomes VAT removal on system loss

ILOILO CITY — MORE Electric and Power Corp. (MORE Power) President and CEO Roel Castro welcomed the Bureau of Internal Revenue’s (BIR) removal of the value-added tax (VAT) on the system loss charge in electricity bills, even as he acknowledged that the relief covers only a small portion of what consumers pay each month.

“This is a welcome move by the government especially by the Bureau of Internal Revenue by removing the VAT on system loss. We have to understand, this is a certain percentage of a certain percentage. We have to be thankful that government acted on this quickly so consumers can realize the reduction as soon as possible,” Castro said.

The BIR issued Revenue Memorandum Circular No. 97-2026 on Sept. 14, treating the allowable system loss charge as a government-mandated pass-through cost excluded from gross sales for VAT purposes.

The exclusion applies prospectively, in line with the effectivity of Energy Regulatory Commission (ERC) Resolution No. 26, Series of 2026.

System loss refers to electricity lost between power plants and end users because of technical factors such as heat in wires and transformers, and non-technical causes such as pilferage and illegal connections.

The system loss charge, however, is only a small part of the power industry’s problems, MORE Power said.

Daily monitoring by the National Grid Corporation of the Philippines (NGCP) shows a decline in supply from power generators, the distribution utility said.

A continued lack of supply would still result in higher generation costs, it added.

Castro remained hopeful that idled generating plants would return to operation soon and ease the burden on consumers, especially in the Visayas.

“We are really optimistic na dapat babalik siya. As per DOE, may babalik ng September. May different dates na nandoon per official. Hopefully the soonest possible time yung baseloads mabalik man lang,” Castro said.

For several weeks, MORE Power, Negros Power, and Bohol Light have been bombarded with complaints from all sectors for implementing manual load dropping (MLD).

NGCP mandates MLD to keep the grid from collapsing when supply from generators falls short. It recorded 96 yellow alerts and 33 red alerts in the Visayas from Jan. 1 to Sept. 7.

Despite widespread information dissemination, Castro admitted that distribution utilities such as MORE Power and Negros Power bear the brunt of the complaints.

Department of Energy (DOE) Secretary Sharon Garin, however, said the distribution utilities are not at fault for the current situation.

In an interview over DZMM, Garin said both the generation and transmission sectors have issues that need to be addressed, not only in relation to the current power situation but also problems that have existed and should have been addressed over the past 10 years.

“No, they receive what they can receive. They try naman. Iba naghahanap ng paraan. Distribution is the least guilty in this place,” Garin said.

Castro said he is hopeful that the inquiry will produce viable short-term and long-term solutions for the Visayas.

Based on the latest collective data released by the DOE and NGCP, Therma Visayas Units 1 and 2 will go back online this September, while the Panay Energy Development Corp. (PEDC) plant will return by the end of October, along with other baseload generation plants in Mindanao.

These plants are expected to help stabilize the supply of electricity on the Visayas grid.