DOE proposes removal of non-technical system loss in power bill 'in phases' 

The Department of Energy (DOE) is proposing for the removal of non-technical system loss charges from consumers’ electricity bill in phases.

At a joint hearing of the Senate committees on energy and public services on Thursday, DOE Undersecretary Riolita Inocencio said the Energy Department, together with the National Electrification Administration (NEA), came up with a plan “on how the gradual phasing out of the non-technical losses proposed to be undertaken.”

Non-technical system loss includes electricity theft or illegal connections.

Technical system loss, on the other hand, are caused by physics or the natural process when electricity is lost when power passes through wires and multiple transformers.

In his presentation, NEA technical advisor Professor Rowaldo “Wali” del Mundo proposed a four-stage implementation of non-technical system loss removal.

For stage 1, the energy agencies proposes the removal of 25% non-technical system loss, including the “above cap” losses or those that exceed the maximum system loss that can be recovered from customers allowed by the Energy Regulatory Commission (ERC).

For stage 2, 50% of the non-technical system loss is removed; while for stage 3, 75% is already removed.

Under stage 4, 100% of the non-technical system loss is removed.

The NEA is proposing to implement the gradual removal of non-technical system loss in January 2027 alongside its plan to extend loans to electric cooperatives to ease their burden in absorbing system loss charges.

During the hearing, ERC chairman Francis Saturnino Juan agreed that removal of non-technical system loss charges in consumer bills should be in phases so as not to strain the financial capabilities of electric cooperatives and distribution utilities.

“Not all distribution utilities are equal… some have already lowered their system losses while many others still have to absorb huge system losses,” Juan said.

In his fifth State of the Nation Address (SONA), President Ferdinand ”Bongbong” Marcos Jr. made an unprecedented announcement that could reform the Philippine energy sector for the benefit of the consuming public.

“And if we're talking about lowering prices, I believe it's time we remove the system loss charges being passed on to consumers. These charges are passed on to consumers, included in their electricity bills, and are even subject to value-added tax (VAT). The system loss is not the consumers' fault, so it is not right that they should be the ones paying for it,” Marcos said.

The President then called on Congress for the immediate amendment of the Electric Power Industry Reform Act (EPIRA) to put a stop to system loss charges, including its accompanying value-added tax (VAT), from being passed on to consumers. — RSJ, GMA News