Marcos Wants ‘System Loss’ Charges Off Your Electric Bill—So Why Are You Still Paying It?

(SPOT.ph) If you tuned into President Ferdinand “Bongbong” Marcos Jr.’s fifth State of the Nation Address (SONA), you likely caught a specific declaration that earned nods—and significant applause—from frustrated homeowners both in the crowd and watching from home: a direct call to remove system loss charges from electricity bills.

In his speech on July 27, Marcos urged Congress to amend Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA), arguing that consumers should not have to pay for electricity that never reaches their homes—or the value-added tax (VAT) added to those charges.

“Hindi naman kasalanan ng konsyumer kung bakit nagkaroon ng systems loss. Kaya hindi naman tama na kailangan sila pa ang pagbabayarin dito,” Marcos stated. “Therefore, we the people request—no, we demand—the immediate amendment of the EPIRA and to prohibit charging systems loss against consumers, including the value-added tax thereon.”

Slashing a chunk off your electric bill is a massive relief for anyone trying to stretch a household budget—which, let’s be real, is most of us. At the same time, Marcos' speech also shines a spotlight on one of those fine-print line items that appear in your Meralco statement every month, even though many consumers may not know what it actually covers.

So, what exactly is system loss—and why are you paying for it?

Also Read: EXPLAINER: That ‘Lifeline Subsidy’ Charge on Your Meralco Bill—And Why You're Paying It

In a nutshell, system loss is electricity that is lost or stolen before it reaches your home. 

It represents the gap between the total amount of power that a utility company like Meralco buys and feeds into the electrical grid and the amount that is actually measured and billed on household meters. System loss falls under two categories: technical loss and non-technical loss. Technical loss refers to electrical energy that turns into heat and consequently is “lost” after traveling long distances through wires, cables, and transformers. On the other hand, non-technical loss is basically the electricity lost to human error, equipment issues, or illegal line connections. 

In a statement, Meralco EVP and COO Engineer Ronnie Aperocho pointed out that system loss is a standard operational reality across the entire power industry, not just present in Meralco bills.

He explained that while utilities can upgrade infrastructure and curb line theft, basic physics means some level of heat loss is unavoidable: “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.”

According to Meralco, the system loss charge accounts for around 5% of an average monthly bill, with Aperocho noting this is well below the 6.5% cap set by the Energy Regulatory Commission (ERC).

Since this is a pass-through cost, Meralco doesn’t actually profit from system loss fees. However, as Marcos pointed out, making consumers shoulder the bill for inefficiencies they didn't cause isn’t right.

Unfair as it may sound, Philippine law is actually what allows system loss charges to be passed on to consumers.

Under EPIRA, distribution utilities and electric cooperatives are legally allowed to pass a capped percentage of their system losses on to end-users. The law tasks the ERC with setting percentage caps so companies can’t pass off excessive neglect to the public, but it still treats system loss as an expense that power distributors can legally recover from consumers.

And because system loss allowances are written directly into EPIRA, Marcos can’t just ban them overnight with an executive order. For change to happen, Congress has to amend the law.

Following this call in SONA, the Department of Energy (DOE) issued a statement saying that the agency “stands firmly” behind the President’s call to overhaul the law: “The electricity sector has evolved significantly, with advances in technology, smarter electricity networks, and a rapidly changing energy landscape. Our policies must likewise evolve to deliver a power sector that is more efficient, transparent, accountable, and responsive to the needs of Filipino consumers.”

Also Read: Marcos Wants Workers Earning Up to P350,000 to Pay No Income Tax