Proposed House bill calls for system loss to be made part of operating costs of distribution utility

Marikina City 1st District Representative Marcy Teodoro has filed a bill prohibiting the pass-through of system loss charges to consumers and exempting system loss from VAT coverage.

The proposed House Bill No. 10461, however, also states that “system loss shall be treated as part of the operating costs of the distribution utility, recoverable only to the extent prudent and reasonable and only through the general distribution rate approved by the ERC (Energy Regulatory Commission), subject to the efficiency benchmarks and loss-reduction standards the ERC shall prescribe.”

President Ferdinand “Bongbong” Marcos Jr. during his State of the Nation Address (SONA) on Monday, July 27, called on both chambers of Congress to amend the Electric Power Industry Reform Act (EPIRA) to put a stop to system loss charges, including an accompanying value-added tax (VAT), from being passed on to consumers.

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

Current laws such as the EPIRA and Republic Act No. 7832 or the Anti-Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act allow distribution utilities to recover a portion of system loss from end-consumers through system loss charge reflected in monthly electricity bills.

Navotas City Representative Tobias Tiangco has filed House Bill 10273 or the "System Loss Charges Abolition Act of 2026," saying that consumers should not shoulder the costs arising from inefficiencies and losses beyond their control.

Quezon City 5th District Representative Patrick Michael “PM” Vargas also filed a similar measure.

Under Vargas’ House Bill 10306, only legitimate technical losses may be passed on to consumers, subject to stricter and fairer limits. It also seeks to reduce and recalibrate the allowable system loss cap so that operational savings and efficiencies directly translate into lower electricity bills.

Speaker Faustino “Bojie” Dy III assured the public that the House of Representatives is ready to act on the legislative priorities of Marcos that he outlined during his fifth SONA.

“The President has made it clear that bringing down electricity costs is a national priority, and the House stands ready to do its part. We will give due priority to the proposed Sariling Kuryente Act and the amendments to the EPIRA to ensure that consumers are no longer made to shoulder charges that should not be passed on to them,” Dy said. —KG, GMA News