Regulators on Tuesday said they would push energy reforms sought by President Ferdinand Marcos Jr., including the removal of systems loss charges that have been blamed for high power rates, amid lukewarm reception from industry stakeholders who said the proposals should be carefully studied.
"The Department of Energy (DOE) fully supports the president's clear policy direction and stands ready to translate these priorities into concrete programs, investments, and legislative reforms that will provide lasting benefits for Filipino consumers, businesses, and future generations," Energy Secretary Sharon Garin said in a statement.
Marcos, during his State of the Nation Address (SONA) on Monday, called for amendments to the Electric Power Industry Reform Act (Epira) that would remove consumer burdens like the systems loss charge and the attendant value-added tax. He also called for the passage of the Sariling Kuryente Act, which seeks to make rooftop solar panel installations and battery storage systems more accessible and affordable for Filipino families.
Systems loss refers to electricity lost during delivery due to technical issues or non-technical factors such as theft. Laws such as the Epira and the Anti-electricity and Electric Transmission Lines/Materials Pilferage Act of 1994 allow distribution firms to recover some of the loss from consumers via a charge included monthly power bills.
Manila Electric Co. (Meralco), the country’s largest distribution utility, said it “respected” Marcos’ policy move but added that systems losses were a “common operational aspect” that power firms have to deal with.
Meralco said that it would “actively participate in the discussions as the proposed amendments to the Epira are deliberated” and that any reforms should these “also support the ability of distribution utilities and electric cooperatives to efficiently operate, invest in infrastructure and system resilience, and deliver safe and stable electricity service.”
Ronnie Aperocho, Meralco executive vice president and chief operating officer, said: “We believe it is important to recognize that system loss is not unique to any distribution utility but is a common operational aspect of the delivery of electricity, which affects the entire power industry."
"While distribution utilities like Meralco continue to invest in modernizing and upgrading facilities and deploying technologies that reduce system losses, a certain level of technical losses remains inherent in operating an electric distribution system. For Meralco’s part, we have consistently invested in system loss management initiatives, network modernization, and operational efficiencies, which enable us to maintain our system loss well below the 6.5 percent cap set by the Energy Regulatory Commission.”
Developers of Renewable Energy for AdvanceMent Inc. President Jose Layug also called for careful consideration of the Marcos’ proposal.
"While we support the proposal of the President to reduce electricity rates, an in-depth and calibrated study must be undertaken before considering eliminating systems loss in the electricity bills,” he said.
“Systems loss has two components. First is the non-technical losses due to electricity theft and illegal tapping, jumper wires and the second one is technical losses as energy turns into heat as electricity flows through long wires and transformers," he added.
Philippine Energy Efficiency Alliance President Alexander Ablaza said: “We will need to distinguish between technical losses and non-technical losses. While energy is naturally lost in conveying and transforming electricity, removing it completely is a technical impossibility. It may be capped progressively though, and there is a pending house bill for this, which is HB 4599.”
“Maybe the President's directive could crack the whip on the non-technical losses such as electricity theft, meter reading errors, and similar issues caused by reasons outside the normal technical operations of transmission and distribution utilities," Ablaza added.
The Energy department said it was ready for discussions with industry stakeholders, which was reiterated by the Energy Regulatory Commission (ERC) – the agency responsible for capping systems loss charges in the country.
The ERC said it also welcomed Marcos’ proposal and affirmed support for reforms that would benefit consumers.
“We also likewise recognize the importance of pursuing measures that help reduce unnecessary costs while ensuring the viability of all distribution utilities and promoting a more efficient, affordable, and reliable power sector," it added.
"As the country’s independent electric power industry regulator, we stand ready to work closely with Congress, the Department of Energy, industry stakeholders, and other concerned government agencies in advancing the legal and regulatory measures necessary to advance this reform.”
The Energy department noted that Marcos, in his SONA, had also highlighted the importance of energy security and a more diversified and future-ready energy mix. It said these were being complemented by the continued implementation of energy projects that would add almost 10,000 megawatts of generation capacity and more than 1,700 megawatts of energy storage systems.
The president also reaffirmed the Philippines' commitment to deeper regional cooperation through the Asean Petroleum Security Framework and the future Asean Power Grid, the department said.
