Senate hearing seeks balance between lower power bills, accountability

MANILA, Philippines — A Senate hearing on system loss charges renewed calls for reforms that would protect consumers from avoidable electricity losses while allowing distribution utilities to maintain reliable and financially viable operations.

Sen. Erwin Tulfo, who opened the hearing, said reforms should not weaken the power sector but should ensure that consumers do not shoulder the cost of inefficiency.

“We want a strong, reliable and financially viable power sector,” Tulfo said. “We should not subsidize inefficiency.”

READ: ERC: Removing nontechnical system loss charges from power bills feasible

The hearing distinguished between technical and nontechnical system losses.

Technical losses occur naturally as electricity passes through wires, transformers and substations. While these losses cannot be completely eliminated, they can be reduced through improved equipment, network design and additional substations, according to Manila Electric Co. (Meralco) director Atty. Ray Espinosa and National Electrification Administration (NEA) Administrator Antonio Mariano Almeda.

Nontechnical losses, meanwhile, are generally caused by electricity theft, illegal connections, meter tampering and other metering irregularities. Power for People Coalition legal counsel Atty. Luke Espiritu said charging consumers for such preventable losses was not defensible.

The distinction is central to reforms being considered under Senate Bills 495, 1083, 1237 and 2131, which seek to address system-loss charges and standards.

Standards, investments

The Energy Regulatory Commission (ERC) said system loss limits should account for differences in geography and network conditions, including whether utilities serve remote islands, rural communities, densely populated cities or disaster-prone areas.

ERC Chairperson and CEO Atty. Francis Saturnino Juan said geography, network design, feeder length and customer density can affect technical losses.

The Philippine Competition Commission’s Legal Services Division also called for an empirical basis in setting system loss caps to ensure that improved utility efficiency translates into savings for consumers.

Meralco reported that its feeder system loss declined from 21.01% in 1986 to 4.22% in 2025, while its nontechnical loss fell below 1%.

Espinosa clarified that system losses exceeding the approved cap are absorbed by distribution utilities and are not automatically passed on to consumers. Further reductions, he said, would require continued investments in network modernization, metering, monitoring, data analytics and enforcement.

Other distribution utilities also reported efforts to modernize their networks and curb electricity theft.

Electric cooperatives, however, said reforms should account for their different operating conditions. Utilities serving islands and remote rural communities often maintain longer power lines for fewer customers, which can result in higher technical losses even when they are operating responsibly.

READ: Law eyed to keep politicians off electric cooperatives

Stronger action vs. power theft

The Department of Energy (DOE) said it was working with the ERC, NEA, distribution utilities and electric cooperatives to identify appropriate system-loss standards.

The DOE is also proposing changes to the anti-electricity pilferage law to make it easier for utilities and law enforcement agencies to act against illegal connections and electricity theft.

The ERC also discussed possible relief from value-added tax on system-loss charges, subject to the completion of regulatory and tax processes.

The hearing underscored that reform does not necessarily mean eliminating all system-loss charges. Technical losses cannot be reduced to zero but should be kept within reasonable and properly regulated limits, while nontechnical losses require stronger prevention, enforcement and accountability.

Tulfo said the goal was to encourage power companies to become more efficient and competitive while giving Filipinos lower electricity costs and better service.