President Ferdinand Marcos Jr.’s call in his fifth State of the Nation Address to stop passing system loss charges and their corresponding Value-Added Tax (VAT) on to electricity consumers is one of the much applauded populist rhetoric of the day.
But unless it is backed by immediate legislative action, it risks becoming another “sana” promise—applauded in speeches yet forgotten in practice.
This proposal is actually far from novel.
As early as 2015, together with my fellow Bayan Muna lawmaker Neri Colmenares and other Makabayan Bloc members, we filed bills exempting system loss charges from VAT.
In 2017, House Bill No. 1616, that we also principally authored, was even approved on third reading by the House of Representatives. The legislative blueprint has existed for years. What has been lacking is political will.
Again, if Malacañang is truly sincere about reducing electricity costs, it should immediately certify the necessary measures as urgent. Consumers do not need another promise. They need a law.
The proposal is anchored on a simple principle of fairness. Consumers should not pay for electricity they never used, nor should they bear the cost of technical losses and power theft that distribution utilities are duty-bound to prevent. Yet that has long been the practice under the country’s power regime.
Although the Energy Regulatory Commission (ERC) limits the amount utilities may recover through system loss charges, Filipino households still pay for a portion of electricity lost through transmission inefficiencies and illegal connections.
For a family consuming about 200 kilowatt-hours a month, the charge can reach around ?100 to ?140, excluding VAT. For millions already struggling with rising food, transport and education costs, every peso matters.
The debate over the proposal also exposed a deeper problem. When ERC Chairman Saturnino Juan raised concerns over who would absorb the cost of removing system loss charges and VAT after SONA, he inadvertently highlighted the priorities that have shaped the power sector for decades: regulatory bodies often appear more invested in safeguarding the bottom lines of power sector oligarchs and revenue targets, as well as government tax collections rather than easing the burden on consumers paying some of Asia’s highest electricity rates.
That is why eliminating system loss charges, while necessary, is only a partial solution. It addresses one symptom without curing the disease.
The deeper problem lies in the Electric Power Industry Reform Act (EPIRA) of 2001. Filipinos were promised that privatization and deregulation would foster competition and bring down electricity prices. More than two decades later, the opposite has happened.
The industry remains concentrated in the hands of a few powerful conglomerates, while electricity rates continue to rank among the highest in the region.
Instead of creating genuine competition, EPIRA transformed electricity into a profit-driven commodity. Consumers became captive customers, while utilities retained mechanisms that allow many operating costs—including system losses—to be passed on to the public. In effect, profits are privatized while risks and inefficiencies are socialized, passed on to the poor millions of Filipinos.
That arrangement is difficult to justify when the country’s largest power companies continue to post enormous profits. Meralco reported a consolidated core net income of 50.57 billion in 2025, up 12 percent from 45.14 billion the previous year. Aboitiz Power Corporation posted 33.1 billion in core net income, while San Miguel Global Power recorded ?48.3 billion in net incomes.
Companies earning tens of billions of pesos annually can certainly absorb ordinary business risks such as system losses. In virtually every industry, operational losses are treated as part of the cost of doing business, not something automatically passed on to customers. There is no compelling reason why power utilities—already among the country’s most profitable corporations—should be exempt from that basic principle while ordinary consumers continue to subsidize their inefficiencies.
The State, meanwhile, has clearly retreated from—even abandoned—its responsibility to ensure affordable electricity. Rather than acting primarily as a public service provider, the government has largely become a regulator that too often appears more concerned with preserving investor confidence and fiscal revenues than protecting consumers.
This imbalance is also evident in the steady corporate takeover of electric cooperatives. These cooperatives were originally established as non-stock, non-profit organizations owned by the consumers themselves to provide affordable electricity in rural communities. Through joint ventures, franchise acquisitions and other privatization schemes, many have gradually come under the control of large private corporations.
Once profit replaces service as the governing principle, consumers lose more than affordable electricity. They lose meaningful participation in decisions affecting their own utilities, while guaranteed returns, higher administrative costs and capital recoveries inevitably find their way into monthly power bills.
Removing system loss charges is therefore only the long overdue beginning. Congress must seriously revisit EPIRA and dismantle the structural defects that have concentrated market power, weakened public accountability and placed corporate profits ahead of consumer welfare.
That includes strengthening electric cooperatives, expanding public participation in power generation and distribution, and empowering regulators to impose stricter oversight and prohibit the transfer of avoidable business losses to consumers.
The current proposal should not be celebrated as a policy breakthrough. It is a long-overdue acknowledgment of what consumer advocates have argued for years: Filipinos should not be charged for electricity they never consumed.
The real test of the President’s commitment lies not in his SONA but in what follows. If the administration truly intends to bring down electricity costs, it should certify the necessary measures as urgent and pursue broader reforms, including substantial amendments—or, even the repeal—of the anti-poor EPIRA.
Filipinos deserve more than temporary relief from a single charge on their monthly bill. They deserve an energy system where power companies—not ordinary consumers—bear the normal risks of doing business. Electricity is an essential public service, not a guaranteed source of private profit insulated from operational losses.
Until that principle is restored through meaningful change in the country’s privatized power regime, Filipino consumers will continue paying the price for a system that rewards corporate earnings while socializing corporate losses. (davaotoday.com)
