Senator Erwin Tulfo pushes bill removing system loss charges from power bills

Senator Erwin Tulfo on Thursday pushed for legislation removing system loss charges from consumers' electricity bills, saying the proposal would reduce the profits of power distribution companies rather than drive them into financial losses.

During a hearing of the Senate Committee on Energy, which he chairs, Tulfo challenged claims by power distributors and generators that eliminating system loss charges would result in a ₱60-billion loss for the energy industry.

"We keep hearing complaints from these companies that they will lose billions if we take out the systems loss charge," Tulfo said. "But let us be clear: this will not cause operational losses to distribution utilities. It will simply reduce their massive, multi-billion-peso incomes. It is time we stop forcing everyday Filipino consumers to pay for electricity they never even used."

Tulfo's remarks came after President Ferdinand Marcos Jr., in his recent State of the Nation Address (SONA), directed the immediate reduction or total elimination of system loss charges passed on to electricity consumers.

During the hearing, Tulfo asked the Energy Regulatory Commission (ERC) whether power distribution and generation companies would actually suffer losses if system loss charges, beginning with non-technical system loss, were removed.

“Totoo ba malulugi po (ang distribution and generation companies)? Is it, is that true kung alisin natin? So, for example, we start with non-technical systems loss. Malulugi po ba?” Tulfo asked.

ERC Chair Francis Saturnino San Juan said technical system losses account for only 1.5 percent of the total system loss, indicating that removing the charges would only reduce companies' earnings rather than threaten their viability.

“So, kabawasan sa kita nila. Hindi sila maba-bankrupt kung alisin natin ang systems loss,” Tulfo exclaimed.

San Juan said the ERC is prepared to implement the removal of system loss charges, but noted that Congress must first amend Section 43(f) of the Electric Power Industry Reform Act (EPIRA), which currently allows system loss to be treated as a pass-through cost.

He explained that under existing rules, distribution utilities are permitted to recover the cost of electricity purchased from power plants that is lost during transmission or through pilferage before it reaches consumers.

Tulfo said requiring private distribution companies to absorb both technical and non-technical system losses would encourage them to improve the efficiency of their grid infrastructure instead of passing operational costs on to consumers.

"The President’s mission is clear, and our priority is the welfare of our consumers," Tulfo added. "These big power companies have been enjoying massive profits for decades. It is only fair that they absorb these operational costs to provide long-overdue financial relief to millions of Filipino families."