Electricity consumers can look forward to slightly lower power bills starting November as the 12% value-added tax (VAT) on allowable system loss charges is set to be removed, according to the Energy Regulatory Commission (ERC).
ERC Chairperson Francis Saturnino Juan revealed on Sunday that the regulator recently convened a meeting with industry stakeholders to finalize the operational details following a new directive from the Bureau of Internal Revenue (BIR).
“Nakipagpulong nga ang ERC sa mga stakeholders nu’ng Biyernes para ma-plantsa ‘yung mga mechanics nito. So hopefully, by October consumption natin ay mag-e-effect na ‘yung walang VAT sa system loss charge, at ito ay makikita na natin sa November na bill na matatanggap natin,” Juan shared during a radio interview.
The policy shift stems from Revenue Memorandum Circular 097-2026, issued on September14, which reclassifies ERC-approved system loss fees as government-mandated pass-through costs, effectively exempting them from the 12% levy.
However, officials clarified that the tax relief applies exclusively to the VAT portion of the fee and does not eliminate the system loss charge itself.
“‘Yung VAT lang ng system loss ang mawawala. ‘Yung system loss charge natin ngayon ay tumatayo ‘yan sa associated na generation at transmission costs nu’ng mga kuryenteng nawawala. Pero hiwalay ito sa generation talagang binabayaran natin, transmission at distribution. ‘Yung VAT diyan ay hindi natin matanggal dahil ‘yan ay nasa batas,” Juan clarified.
Juan said the VAT component currently accounts for roughly P20 to P30 of a typical power bill. Estimates from the Department of Energy indicate that average households consuming around 200 kilowatt-hours can expect monthly savings of at least P20 once the adjustment appears on their billing statements.