What It Means
- Full system loss charge removal is not law yet. It remains a request to Congress, and DOE Secretary Sharon Garin says implementation could take up to a year.
- Consumers currently pay roughly ₱1 per kilowatt hour in system loss charges, a cost the DOE cannot cancel through its own policy alone.
- Electric cooperatives will only back system loss charge removal if government funds the gap, warning that an unfunded ban could break their finances.
- Meralco wants any system loss charge removal tied to guarantees that distribution utilities can still invest in infrastructure and grid resilience.
- The law that actually authorizes the charge sits outside EPIRA, in a 1994 anti-pilferage statute that Congress has not touched.
President Marcos got the longest ovation of his fifth SONA when he demanded system loss charge removal from every electricity bill in the country. Within a day, his own Energy Secretary said that demand needs an act of Congress and roughly a year to carry out. That gap, between what the room applauded and what the responsible agencies are now describing, is worth more attention than either PHILRECA’s warning or Meralco’s caution on their own.
The Applause Line, Word for Word
Marcos did not hedge. “Therefore, we the people request, no we demand, for the immediate amendment of the EPIRA and to prohibit charging systems loss against consumers, including the value added tax thereon,” he said, in a passage the Philippine News Agency reported drew loud applause from the gallery. The demand covered two things at once: the base system loss charge itself, and the VAT layered on top of it. Nothing in that line suggested a year of legislative process. It read like a decision already made.
Congress Holds the Timeline, Not the President
A day later, Energy Secretary Sharon Garin told reporters the DOE cannot deliver system loss charge removal on its own. “We can only go so much. We cannot totally issue a policy removing it because that’s against the law,” she said, according to ABS-CBN. She put a number on it too: “mga isang taon siguro,” roughly a year at maximum, tied partly to utilities that need new equipment before losses can actually shrink. What the DOE can do in the meantime is tighten existing rules and push rates down at the margins. What it cannot do is erase the charge by memo. That distinction did not make it into the applause.
Cooperatives Set Their Price for Support
PHILRECA, the association representing electric cooperatives, is not opposed to system loss charge removal outright. Its position, through executive director Atty. Janeen Colingan, is conditional: cooperatives will support it only if government directly absorbs the cost through the General Appropriations Act, with a clear subsidy mechanism attached. Cooperatives operate as non-profits, unlike private distribution utilities that carry a margin for shareholders. An unfunded system loss charge removal does not erase the cost of transmission losses on long rural lines or theft-related losses in hard-to-reach areas. It just moves that cost onto a balance sheet with far less room to absorb it, and PHILRECA has said publicly that pushing it there without subsidy risks violating EPIRA itself.
Meralco Frames the Cost of Compliance
Meralco’s response is more measured but points at the same gap. EVP and COO Ronnie Aperocho said the utility “respects” the policy direction and will join the EPIRA discussions, but wants reforms to “carefully consider the impact… on the operations and sustainability of distribution utilities,” so that companies can still “invest in infrastructure and system resilience.” Translated out of corporate language, Meralco is saying system loss charge removal, done carelessly, could shrink the capital available for exactly the grid upgrades that reduce technical losses in the first place.
The Law Nobody Named
Every outlet covering this story described the charge as something EPIRA created. It didn’t. The actual authorization sits in Republic Act 7832, the 1994 Anti-Pilferage Act, under Section 10, titled “Rationalization of System Losses by Phasing out Pilferage Losses as a Component Thereof.” That section set the original recoverable caps, starting at 14.5% for private utilities and 22% for cooperatives, phasing down over several years to a floor the regulator controls. EPIRA’s Sections 40 and 43(f), passed years later, simply let the distribution charge include “other charges authorized by law,” which is the hook that carries RA 7832’s system loss cap into every modern electricity bill.
A pending House Bill, HB 9106, filed by Reps. Nathaniel Oducado and Charisse Anne Hernandez two months before this SONA, already targets both laws at once, EPIRA’s Sections 40, 43(f), and 60, and Section 10 of RA 7832 directly. That bill existing before the speech means genuine system loss charge removal was already mapped out in Congress before it became a presidential talking point. It also means that amending EPIRA alone, without touching RA 7832, would leave the original 1994 authorization standing.
Four Positions, One Promise
| Party | Position |
|---|---|
| Marcos, SONA | Demand immediate EPIRA amendment to prohibit both the system loss charge and its VAT |
| DOE, Sec. Garin | Requires Congress to act; full system loss charge removal could take up to a year |
| PHILRECA | Supports it only with a funded government subsidy; warns an unfunded ban risks violating EPIRA |
| Meralco | Backs the direction but wants guarantees on utility sustainability and infrastructure investment |
Every party in that table is responding to the same SONA line. None of them describe the same version of system loss charge removal.
The version of system loss charge removal that got a standing ovation assumed the charge disappears and nobody absorbs the difference. The version now being negotiated by DOE, PHILRECA, and Meralco assumes someone still pays, whether that is the national budget, the cooperatives’ balance sheets, or a slower phase-in that leaves the charge partly intact for another year. Congress has not amended EPIRA. RA 7832 has not been touched. The bill that maps out how to do both was filed before the President’s speech and remains where it was filed, in the House. The gap between the applause and the paperwork is where the cost of this promise will actually land.
Track more regulatory shifts that affect your business in Policy & Regulation section of Hemos PH.
