Energy advocacy group questions Meralco's stance in system loss charges

An energy advocacy group on Thursday questioned Manila Electric Company’s (Meralco) refusal to shoulder system loss charges following President Ferdinand Marcos Jr.’s directive to the Department of Energy (DOE) to scrap such charges in the consumers’ electric bills.

“Every business absorbs their cost of doing business. Restaurants don't charge customers for spoiled food, and delivery companies don't bill clients for damaged cargo,” said Power for People Coalition (P4P) convenor Gerry Arances in a statement.

“Why should electricity consumers be forced to pay for power they never received? Why can’t Meralco pay for system loss? Electricity is not a luxury—it's an essential public service, and consumers should only be charged for the electricity that actually reaches their homes and businesses,” he added.

The group said that Meralco’s stance sends a clear message: “…protecting profits matters more than protecting consumers.”

A day after Marcos made the directive during his fifth State of the Nation Address, Meralco noted the potential impact of scrapping system loss charges on power distribution utilities’ operational and financial health.

Meralco chairperson and CEO Manuel V. Pangilinan later questioned the directive: “So, who's going to pay for that? The industry? It's going to cost tens of billions of pesos.”

System loss refers to electricity lost during distribution due to technical and non-technical factors.

Technical losses occur naturally as electricity travels through power lines and equipment, including transformers. Non-technical losses, meanwhile, include electricity theft, pilferage and illegal connections such as the use of “jumpers.”

The DOE earlier said households could see savings of up to 10% on their electric bills once system loss charges are removed.

Further, the P4P said the government should act with urgency in implementing the directive.

“If the government is truly serious about providing relief, then it should act with urgency instead of buying time while industry lobbyists negotiate behind closed doors. Every month of inaction means another month of unjust charges. We are only talking about 5.5% of the system loss charges, what more if we tackle other unjust and even bigger pass-through costs, such as in power generation?” said Arances.

The DOE earlier admitted, however, the implementation may take at least a year.

The Energy department has already formed a joint task force to establish the technical, regulatory, and legislative framework to implement the president’s directive to remove system loss charges and their accompanying value-added tax (VAT) from consumers' electricity bills. —RF, GMA News