ERC: Lower power bill possible before Christmas if VAT on system loss removed

The Energy Regulatory Commission (ERC) said consumers might be able to enjoy a lower electricity bill before Christmas, after it filed a resolution removing the value-added tax (VAT) on system loss.

In his fifth State of the Nation Address last July, President Ferdinand "Bongbong" Marcos Jr. urged the removal of system loss charges from consumer electricity bills.

EXPLAINER: What is system loss?

However, in a “24 Oras” report by Bernadette Reyes on Tuesday, the ERC said that removing the VAT from the system loss charge is what they can execute immediately, as it does not require congressional amendments to existing laws.

“Hindi na kinakailangan pang hintayin ang pag-a-amyenda sa EPIRA [Electric Power Industry Reform Act] or sa batas at NIRC [National Internal Revenue Code],” ERC Chairperson and CEO Francis Saturnino Juan said.

(This would not require amendments to EPIRA or the tax laws under the NIRC.)

“So ito ang minabuting gawin ng ERC sa pakikipag-usap din at ugnayan sa BIR [Bureau of Internal Revenue],” he added.

(So this is what the ERC deemed best to pursue in coordination and consultation with the BIR.)

Systems loss refers to electricity lost during transmission and distribution, whether caused by technical issues or illegal acts such as use of “jumpers” or pilferage.

According to the ERC, the BIR must first concur with the resolution, and changes must also be implemented in the billing and collection systems of distribution utilities.

At present, the ERC said, the measure has been submitted to the BIR, which holds the authority to determine how the policy will be enforced.

More than VAT removal

For some consumers, eliminating system loss entirely, rather than just removing its VAT, would provide far greater relief.

Lita Oliveros, a consumer, shared that her overdue and current electricity bills have already overlapped, making it difficult to cope despite taking strict energy-saving measures.

“Mabigat po kasi minsan naiiwan ‘yung isang bill—‘yung present,’ yung current,” Oliveros said.

(It’s heavy on the pocket because sometimes one bill gets left behind, then a new one arrives.)

To cut costs, she said they have reduced their use of the air conditioner and refrigerator.

Oliveros argued that removing the VAT on system loss gives smaller relief compared to scrapping the system loss charge itself.

“Kalahating kilong bigas, wala pa. Napakaliit lang din naman nun sa mahal na ngayon ng mga bilihin,” she said.

(It can’t even buy half a kilo of rice. It’s far too small given how expensive commodities are today.)

Computer shop owner Olive Sambilay similarly viewed the savings from the VAT removal as minimal.

“Maliit yon para sa atin, sa amin, di ba? ‘Yung aalisin na VAT na ‘yon na 12 percent?” Sambilay said.

(That’s very small for us, isn’t it? That 12-percent VAT being removed?)

According to the ERC, the Department of Energy (DOE) and the National Electrification Administration (NEA) are still working on the mechanism to eliminate the actual system loss charge.

“Mayroon naman nang binabalangkas na ang Department of Energy kung paano ‘yung ating gagawing pagtatanggal unti-unti ng system loss, both ‘yung technical at non-technical, at kung paanong ang pagtatanggal naman nito ay 'di makakaapekto doon sa operasyon ng mga utilities,” Juan said.

(The Department of Energy is already drafting a plan on how we will gradually phase out system loss, both technical and non-technical, while ensuring that its removal will not compromise utility operations)

GMA News has reached out to the BIR and the DOE for comment and has yet to receive a response as of posting time. — BM, GMA News