Manny Pangilinan Raises Billion-Peso Question Over Plan to Scrap System Loss Charges
MANNY PANGILINAN – A proposal to eliminate system loss charges has sparked fresh debate after Manny Pangilinan questioned who would ultimately shoulder the massive financial burden.
Manila Electric Company (Meralco) Chairman and CEO Manny Pangilinan, also known as MVP, has spoken out regarding the proposal to remove the system loss charge currently being collected from electricity consumers. His remarks came after President Ferdinand “Bongbong” Marcos Jr. urged lawmakers to amend the Electric Power Industry Reform Act (EPIRA) during his recent State of the Nation Address (SONA) on Monday, July 27.
The President’s proposal seeks to prevent consumers from shouldering the cost of system loss charges, as well as the corresponding value-added tax (VAT), by introducing amendments to the country’s power industry law. The move is aimed at reducing the financial burden on electricity users across the Philippines.
However, Pangilinan emphasized that eliminating the system loss charge is not a simple matter. According to him, such a decision would have significant implications for the entire electricity sector, including power generation, transmission, and distribution companies.
Explaining his position, Pangilinan said, “It’s a big bill for the industry because it cuts across generation, transmission, and distribution. The bill is too big for the industry to absorb all of it.
“So, there’s got to be that discussion. It’s going to impact the entire power industry in this country.”
He stressed that before any decision is implemented, there must first be a thorough discussion on how the industry would cope with the financial impact of removing the charge.
Pangilinan also raised concerns about who would ultimately shoulder the cost if the system loss charge is completely removed. He noted that the potential losses involved could amount to billions of pesos, making it a major concern for the power sector.
“It is not a small matter… So, who’s going to pay for that? The industry? It’s going to cost tens of billions of pesos. Will you not survive?” he continued.
The system loss charge refers to the difference between the total electricity generated by power plants and the actual electricity delivered to and paid for by end-users. These losses may result from technical limitations in transmission and distribution systems, as well as other factors recognized under existing regulations.
Meanwhile, the Department of Energy (DOE) said it is currently studying possible measures to reduce system losses without immediately passing the financial impact on to consumers. The agency is expected to coordinate with stakeholders as discussions on the proposed EPIRA amendments continue.
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