CONSUMERS should not shoulder the cost of electricity lost due to theft, poor maintenance or weaknesses in the power distribution system, Bagong Henerasyon Party-list Rep. Robert Nazal said on Thursday as he filed a bill prohibiting electric distribution utilities from passing system loss charges on to end-users.
House Bill (HB) 10357 seeks to amend Republic Act (RA) 7832 and the Electric Power Industry Reform Act of 2001 (Epira) to prohibit the direct or indirect recovery of distribution system losses, including the value-added tax imposed on those charges, from electricity consumers. The proposal follows President Ferdinand Marcos Jr.’s call during his fifth State of the Nation Address (SONA) to remove system loss charges from electricity bills.
“The consumer should pay for the electricity that was actually delivered to him — not for the electricity that was lost because of theft, lack of maintenance or weaknesses in the system. The entities that control the system must bear the responsibility for improving it,” Nazal said.
The measure would treat technical and nontechnical system losses as operating expenses and business risks that must be absorbed by distribution utilities. It would also strip the Energy Regulatory Commission (ERC) of its authority to approve the recovery of those costs through electricity rates or other billing mechanisms.
Nazal said HB 10357 is intended to strengthen consumer protection and hold distribution utilities more accountable by requiring them to improve the efficiency and reliability of their power systems.
“Our call on our colleagues in the House is to immediately begin hearings on the proposed amendments to Epira. And if the President is truly serious about what he said in his SONA, he should certify this measure as urgent once it reaches the plenary,” he said.
The proposal also requires distribution utilities to submit five-year system loss reduction plans, undergo regular independent audits and comply with annual performance evaluations by the ERC.
Consumers who are charged in violation of the proposed law would be entitled to refunds or credits against future electricity bills.
On Thursday, Sen. Erwin Tulfo also pushed to remove nontechnical system loss charges from consumers’ electricity bills, saying they should not pay for losses caused by power theft, illegal connections and pilferage.
“In my opinion, it is better to remove it to reduce the burden on our countrymen,” Tulfo said during a Senate Committee on Energy hearing.
He distinguished between technical system losses — which are unavoidable due to the physical limitations of power transmission — and nontechnical losses resulting from illegal connections, meter tampering and electricity theft.
“The distributor should answer for that because it was stolen from him,” Tulfo said, comparing the practice to charging customers for losses from shoplifting in retail stores.
Tulfo noted that removing nontechnical system loss charges could significantly lower electricity bills, particularly in the provinces where electric cooperatives are allowed higher system loss caps.
ERC Chairman and Chief Executive Officer Francis Saturnino Juan said lawmakers would need to determine how unavoidable technical losses would be absorbed if they are no longer passed on to consumers.
Juan agreed that nontechnical losses are largely controllable through stricter monitoring and enforcement against illegal connections. He noted that RA 7832, the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994, was enacted primarily to curb such losses.
The National Electrification Administration (NEA) also acknowledged that reducing nontechnical losses could benefit consumers. NEA Deputy Administrator for Legal Services Rossan SJ. Rosero-Lee said electric cooperatives are subject to ERC-imposed system loss caps, with some off-grid areas allowed up to 12 percent. Cooperatives that exceed the allowable cap must absorb the excess cost.
Rosero-Lee said that while rural electric cooperatives incur unavoidable technical losses because of their extensive distribution lines, efforts are under way to better distinguish technical from nontechnical losses.
