House Speaker Faustino “Bodjie” Dy III and Majority Leader Ferdinand Alexander “Sandro” Marcos have filed a bill seeking to remove system loss charges from consumers’ electricity bills.
House Bill No. 10430 or the proposed Systems Loss Charge Abolition Act, would remove system loss as a separate component of consumers’ monthly electricity bills that will prohibit distribution utilities to pass on avoidable losses to paying customers.
If enacted into law, it will protect paying customers from shouldering costs resulting from power theft, defective or inaccurate meters, weak billing and collection systems, poor maintenance, inefficient operations or negligence by distribution utilities.
The bill states that while distribution utilities should be allowed to recover reasonable costs necessary to provide reliable electricity service, consumers should not pay for losses from operational inefficiencies or failures that utilities can prevent.
“President Ferdinand ‘Bongbong’ Marcos Jr. has placed high electricity costs at the center of the national agenda, and Speaker Bojie Dy and I are drawing a fair line: consumers should pay for efficient service, not for theft, negligence or operational failures they did not cause. Hindi dapat gawing insurance policy ang buwanang bill ng ordinaryong pamilya para sa mga pagkukulang na kayang pigilan ng utility,” Marcos emphasized.
Under the proposed law, distribution utilities would be prohibited from recovering disallowed system losses through wheeling charges, supply charges, metering charges, universal charges, subsidies or any other item appearing on consumers’ monthly bills.
The Energy Regulatory Commission (ERC) would determine the limited portion of electricity necessarily consumed in the efficient operation of a distribution network that may be recovered as part of the distribution wheeling charge.
Costs arising from illegal electricity use, power theft and the theft or destruction of electrical lines, equipment and materials could no longer be passed on to paying customers.
The prohibition will also cover losses caused by defective or inaccurate meters, billing and collection deficiencies, inadequate maintenance, inefficient operations, negligence and other factors reasonably within a utility’s control.
Distribution utilities, however, would retain the right to recover prudent and reasonable costs needed to maintain reliable service and remain financially viable.
The ERC will implement the reform in phases to protect consumers without disrupting electricity reliability or destabilizing properly managed utilities. The transition will gradually reduce recoverable systems loss costs and will be completed within three years from the effectivity of the law’s implementing rules and regulations.
The proposed measure also requires the ERC to establish minimum efficiency standards for distribution utilities, including performance benchmarks for service reliability and collection efficiency.
“This is not a blanket denial of legitimate costs, and that distinction matters to President Ferdinand ‘Bongbong’ Marcos Jr. and Speaker Bojie Dy. Utilities that operate efficiently may recover prudent expenses, but costs born of controllable losses must remain where responsibility belongs,” Marcos added.