Domestic manufacturers said reducing electricity cost in the country will strengthen Philippine manufacturing and attract more investments, leading to enhancement of the country’s overall economic competitiveness.
The Federation of Philippine Industries (FPI) issued this statement in response to the the Proposed Amendment of the Electric Power Industry Reform Act (EPIRA) on System Loss Charges following President Marcos Jr.’s call during his SONA to reduce electricity cost in the country by removing the systems cost in the power bill.
“FPI supports a comprehensive review of the recovery of System Loss Charges, including the value-added tax (VAT) imposed thereon,” said FPI Chairperson Elizabeth H. Lee. She, however, said that any amendment to EPIRA should be supported by a comprehensive technical, regulatory, and economic assessment by the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) to ensure that any policy reform is transparent, equitable, and sustainable.
System losses, both technical losses inherent in the transmission and distribution of electricity and non-technical losses arising from electricity theft, illegal connections, meter tampering, and other unauthorized consumption, are recognized realities of electric power systems worldwide, FPI said.
Accountability
FPI likewise recognizes that consumers should not bear the cost of operational inefficiencies. The current regulatory framework already incorporates accountability measures through ERC-prescribed caps on recoverable losses with losses beyond allowable thresholds being absorbed by distribution utilities and electric cooperatives.
This provides a continuing incentive for utilities to improve operational efficiency and reduce avoidable losses. Going forward, reforms should continue to encourage investments that reduce technical losses while simultaneously strengthening measures to eliminate non-technical losses through more effective anti-electricity theft enforcement and improved governance.
Stability
FPI also emphasizes that any reform should preserve the long-term financial viability and stability of the electric power sector. Reliable electricity infrastructure requires sustained investments in the maintenance, modernization, expansion, and resilience of the country’s transmission and distribution networks. Policy reforms should therefore be implemented through a carefully designed transition framework that provides meaningful relief to consumers without discouraging continued investments that are essential to ensuring energy security, business continuity, and economic growth.
At the same time, FPI encourages the government to intensify efforts to address the root causes of non-technical system losses, particularly electricity theft, illegal connections, and meter tampering. Stronger enforcement of existing laws, together with more effective anti-pilferage measures and public-private cooperation, will help reduce avoidable losses, promote fairness among consumers, and improve the overall efficiency of the power sector.
Affordability
FPI likewise encourages policymakers to adopt a comprehensive approach to electricity affordability. While the review of System Loss Charges is an important step, other significant cost drivers—including generation costs, taxes, transmission charges, universal charges, and other policy-driven components of electricity bills—should likewise be examined to ensure that reforms collectively improve the competitiveness of Philippine industry while maintaining a secure, reliable, and financially sustainable power sector.
