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TACLOBAN CITY– Northern Samar Rep. Edwin Ongchuan (2nd district) has asked the Energy Regulatory Commission (ERC) to consider immediately lowering the system loss charges passed on to electricity consumers while Congress works on legislation to eventually abolish the charges.
Ongchuan, vice chairperson of the House Committee on Energy, raised the proposal during the committee’s Aug. 5 hearing, asking whether the ERC could reduce the allowable system loss caps under its existing authority without waiting for Congress to amend the Electric Power Industry Reform Act (EPIRA).
The ERC said it has the authority under Section 43(f) of EPIRA to determine and adjust system loss caps based on technical considerations, including lowering the allowable limits.
However, the regulator clarified that completely removing system loss charges from consumers’ electricity bills may require legislative action.
Ongchuan said lowering the allowable cap could provide immediate relief to consumers while Congress considers measures to prohibit distribution utilities from passing system loss costs on to electricity users.
System loss refers to electricity lost between the amount of power delivered into a distribution system and the amount ultimately billed to consumers.
It includes technical losses from the transmission of electricity through power lines and equipment, as well as nontechnical losses caused by factors such as electricity pilferage and illegal connections.
Under the current EPIRA framework, distribution utilities may recover a portion of allowable system losses from consumers, subject to limits set by the ERC. Losses beyond the prescribed caps cannot be passed on to consumers.
The issue gained renewed national attention after President Ferdinand Marcos Jr. called for the abolition of system loss charges during his fifth State of the Nation Address on July 27.
Marcos urged Congress to amend EPIRA to prohibit the charging of system losses to consumers, including the value-added tax imposed on such charges, saying consumers should not shoulder losses that are not of their making.
The House has since moved to prioritize measures seeking to remove system loss charges from electricity bills.
During the Aug. 5 hearing, Ongchuan also raised the issue of VAT previously imposed on system loss charges and asked about the possibility of refunds if the charges are eventually abolished.
The ERC said it had already sought action from the Bureau of Internal Revenue (BIR) to exclude system loss from the VAT tax base, but had yet to receive favorable action.
For Ongchuan, reducing the system loss cap through the ERC’s existing regulatory authority could serve as an interim measure to ease consumers’ electricity costs while Congress works on the broader amendments needed to permanently remove the charges.
JOEY A. GABIETA








