THE Energy Regulatory Commission (ERC) has ordered all distribution utilities to adopt a new electricity-bill format that clearly shows system-loss charges and other government-mandated pass-through costs exempt from value-added tax (VAT).
The order takes effect immediately after its publication in the Official Gazette or a newspaper of general circulation.On Aug. 26, the ERC classified allowable system-loss charges as government-mandated pass-through costs that do not form part of the gross sales of generation companies, the National Grid Corp. of the Philippines or distribution utilities for VAT purposes.System loss refers to electricity lost during transmission and distribution because of technical factors, such as resistance along power lines, and nontechnical causes, including theft and metering errors. Regulators allow utilities to recover only losses within prescribed limits.The Bureau of Internal Revenue subsequently removed VAT from allowable system-loss charges to reduce consumers’ electricity bills.
