Palace: Power utilities should avoid system loss

MANILA, Philippines —  Malacañang yesterday called on electricity distributors to improve their efficiency so consumers would no longer bear system loss costs, as it said that there are no talks yet on providing subsidies to power utilities that may be affected.

During his fifth State of the Nation Address on Monday, President Marcos called for amendments to the Electric Power Industry Reform Act (EPIRA) to discontinue the passing on to consumers of system loss charges, including the corresponding value-added tax.

The Philippine Rural Electric Cooperatives Association Inc. (PHILRECA), which represents 121 electric cooperatives in the country, said it can support the complete elimination of system loss charges from electricity billing if the government directly shoulders these costs through a dedicated subsidy mechanism.

Asked during a media briefing yesterday to react to PHILRECA’s proposal, Palace press officer Claire Castro said: “In terms of subsidizing, it is not being discussed.”

“Utility companies need to study how they can avoid losses,” she added.

Castro said Marcos’ proposal to prohibit the passing on of system loss to customers was not meant to burden utility companies.

“What the President wants is for utility companies to ensure that they undertake planning and monitoring to avoid these losses, especially the losses because of theft, pilferage, that are shouldered by Filipinos who settle their obligations,” she said.

For her part, Energy Secretary Sharon Garin said the scrapping of the system loss charge will cut power rates by five to 15 percent.

While she initially projected that it would be removed within a year, she maintained that there is always the possibility of scrapping it sooner rather than later.

However, Meralco chairman Manuel Pangilinan said the plan to scrap the system loss charge could cost power companies “tens of billions of pesos” if they are forced to shoulder it.

While the proposal has drawn public support, Pangilinan argued that eliminating the charge would not make the underlying cost disappear. – EJ Macababbad, Brix Lelis, Mark Ernest Villeza, Delon Porcalla, Artemio Dumlao