Palace tells power firms to curb theft amid Marcos' bid to lower bills

MANILA, Philippines — Malacañang urged power utilities to strengthen programs against electricity theft and pilferage after industry groups warned that removing system loss charges from power bills could strain utilities without government support.

Palace Press Officer Claire Castro clarified Wednesday, July 29, that President Ferdinand Marcos Jr. wants to remove the added burden from consumers' bills, but does not intend to simply transfer the cost to utility companies.

"What the President wants is for utility companies to make sure they have plans and monitoring to prevent these losses, especially losses from theft and pilferage that are being shouldered by responsible Filipinos who pay their obligations," Castro said in Filipino.

'Be efficient'

Castro said utility companies should be efficient in reducing losses from theft and pilferage, even as the government studies how the proposed removal of system loss charges would affect the power sector.

"They also need to be efficient to prevent losses from being passed on to our countrymen. This is being studied because the President does not want this to have a negative effect on utility companies," Castro said.

Marcos proposed removing system loss charges from electricity bills during his fifth State of the Nation Address on July 27, saying consumers should not be made to pay for electricity losses and the value-added tax, or VAT, imposed on those charges.

The Department of Energy clarified this on Tuesday and explained that Marcos’ proposal only covers system loss charges and the 12% VAT that comes with it, and not the entire VAT on electric consumption.

The proposal drew concern from Manila Electric Co. and the Philippine Rural Electric Cooperatives Association, both calling for careful deliberation.

PHILRECA, for one, expressed conditional support for the proposal, stressing that removing VAT on system loss should not translate into "unrecoverable input VAT or disguised costs” to be shouldered by electric cooperatives, generation companies, and the National Grid Corp.

Meralco, meanwhile, said it is ready to participate in discussions about the proposal.

EPIRA amendments

System loss charges cover the cost of electricity lost before power reaches consumers, including technical losses in the grid and non-technical losses such as theft and pilferage.

Marcos' proposal would require amendments to the Electric Power Industry Reform Act, or EPIRA, which restructured the power sector and expanded private participation in power generation.

At the inauguration of the Energy Museum and the 25th anniversary program of EPIRA earlier Wednesday, Marcos said the government is working with private partners to advance the proposal.

"It is only fair that Filipino families pay for what electricity they use, not for inefficiencies that really are beyond their control," Marcos said.

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