ERC Dismisses Power Firms’ Bankruptcy Claims Over System Loss Charge Removal as Doomsday Scenario

The Energy Regulatory Commission (ERC) has rejected claims by some power firms that removing the system loss charge from consumer electricity bills would lead to their bankruptcy, describing such assertions as exaggerated doomsday scenarios. This comes after President Ferdinand Marcos Jr. called for the elimination of the system loss charge during his fifth State of the Nation Address, prompting mixed reactions from the energy sector.

Several energy companies, including Meralco chair Manny V. Pangilinan, have expressed concerns that the industry could collapse without the system loss charge, which recovers costs related to electricity lost before reaching consumers. However, ERC Chair Francis Saturnino Juan countered these claims during an interview on Unang Balita, emphasizing that the priority remains providing reliable service to customers and that the commission will not allow the industry to use such arguments to justify maintaining the charge.

Juan explained that the ERC is actively studying ways to reduce energy costs for consumers, including the possibility of removing or reducing the non-technical portion of system loss. Non-technical system loss refers to electricity lost due to theft or pilferage, which distribution utilities have some control over. He noted that if power firms enhance safeguards and intensify efforts to apprehend those responsible for theft, the non-technical system loss charge could be lowered or eliminated.

Energy Secretary Sharon Garin has indicated that the removal of the system loss charge could take up to a year to implement. Juan acknowledged that while deciding to remove the charge is straightforward, the preparation required to do so is complex and time-consuming. Power firms need sufficient time to adjust their operations to ensure that eliminating the charge does not negatively impact other services they provide.

Another factor influencing the timeline is the legislative process. The removal of the system loss charge requires an amendment to the Electric Power Industry Reform Act (EPIRA), which means Congress must pass the necessary legislation. The speed at which lawmakers can act will affect when consumers might see relief on their electricity bills.

Juan’s remarks suggest that the ERC is open to administrative measures to address system loss charges, particularly focusing on non-technical losses that utilities can control. This approach aligns with broader government efforts to reform the power sector and reduce costs for consumers without destabilizing the industry.

The debate over system loss charges highlights the tension between protecting consumer interests and ensuring the financial viability of power distributors. While some industry players warn of dire consequences if the charges are removed, regulators and government officials appear committed to pursuing reforms that could ultimately lower electricity costs for Filipino households.

As discussions continue, the ERC’s stance indicates a willingness to explore practical solutions that balance these competing concerns. The commission’s ongoing studies and consultations with stakeholders will likely shape the future of system loss charges and their impact on the country’s power sector.