SEN. Jinggoy Estrada on Monday pressed for the abolition of system loss charges, saying consumers should not pay for electricity they did not use.
Estrada sponsored Senate Bill 2474, or the proposed “System Loss Charges Abolition Act,” which seeks to permanently prohibit distribution utilities, electric cooperatives and other regulated power providers from passing system loss costs on to consumers.
“It is unconscionable, to say the least, to allow this unjust regime to persist any further. It is not right to charge consumers for electricity they did not use. And it is even more unacceptable to make consumers shoulder the cost of deficiencies in the system,” Estrada said in a statement.
Estrada said the current mechanism, compounded by value-added tax, contributes to making electricity rates in the Philippines among the highest in Southeast Asia.
“This measure seeks to rectify the injustice imposed on Filipino consumers who assume the responsibility of paying for electricity lost through no fault of their own,” the senator said.
“It prohibits the imposition of the system loss charge, or the passing of expenditures related to system loss on to consumers, in any manner or form,” he added.
System losses refer to electricity lost during transmission and distribution, whether due to technical issues involving conductors, transformers and distribution networks or nontechnical causes such as pilferage, meter-reading errors and meter tampering.
Under current rules set by the Energy Regulatory Commission (ERC) pursuant to the Electric Power Industry Reform Act of 2001 (Epira), these losses are passed on to consumers — up to 5 percent of the monthly bill for Meralco subscribers and as much as 12 percent for those served by electric cooperatives in rural areas.
Estrada’s bill seeks to bar distribution utilities, electric cooperatives and other regulated entities from passing on, recovering or charging consumers — directly or indirectly — for any cost attributable to system losses, whether technical or nontechnical.
The measure would also prohibit the recovery of system loss costs incurred before the law takes effect. Such costs would instead be borne exclusively by the concerned distribution utility or cooperative and treated as nonrecoverable for rate-making purposes.
To protect smaller power providers and help ensure a stable electricity supply in the countryside, the bill directs the ERC, Department of Energy and National Electrification Administration to assist distribution utilities and electric cooperatives in upgrading infrastructure and reducing system losses at the source.
Senate Bill 2474 also seeks to amend Section 46 of Epira to impose escalating penalties on utilities that violate the proposed law.
First-time violators would face fines of P5 million to P10 million, along with a full refund of prohibited charges collected from consumers, plus legal interest.
Repeat offenders would face fines of P10 million to P20 million and a six-month suspension of their executive officers.
