The Market Monitor Minding the Nation's Business
Manila Electric Company (Meralco) chairman Manny V. Pangilinan warned that the power industry in the country “may not survive” if utility companies alone shoulder the costs of system loss charges.
“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,” Pangilinan said.
President Ferdinand Marcos Jr., in his State of the Nation Address (SONA) on July 27, proposed to amend the Electric Power Industry Reform Act (EPIRA) as a solution to high electricity bills.
Marcos said the system losses are not the consumers’ fault and therefore must not be charged on their monthly bills.
“So, who is going to pay for that? The industry? It’s going to cost tens of billions of pesos. We will not survive,” Pangilinan said.
As this developed, Meralco said it is studying possible reforms to system loss charges—a pass-through cost added to monthly electricity bills to recover the cost of electricity lost during transmission or through illegal connections.
Although the power giant said it supports Marcos’ call to lower electricity costs, Meralco Executive Vice President (EVP) and Chief Operating Officer (COO) Ronnie Aperocho clarified that technical power losses cannot be completely eliminated.
“System loss is not unique to any DU, but is a common operational aspect of the delivery of electricity—which affects the entire power industry,” Aperocho said.
“For Meralco’s part, we have consistently invested in system loss management initiatives, network modernization, and operational efficiencies—which enable us to maintain our system loss well below the 6.5-percent cap set by the ERC [Energy Regulatory Commission],” he elaborated, adding that any reforms must still consider the financial health of distribution utilities so they can continue upgrading infrastructure.
According to Meralco, its 12-month moving average system loss in the first quarter of 2026 stood at 5.72 percent, lower than 5.85 percent a year ago. For consumers, system loss charges account for about five percent of their monthly electricity bill.
Meralco added that it remains open to discussions as Congress works on amendments to the Electric Power Industry Reform Act (EPIRA).
Meralco and the national organization of electric cooperatives, the Philippine Rural Electric Cooperatives Association, had earlier expressed conditional support for the proposal.
They called for a careful review, warning that utility companies could face bankruptcy should it be implemented without proper government support.
Meanwhile, the ERC and the Department of Energy (DOE) assured close coordination with stakeholders and the government in evaluating and expediting amendments to EPIRA.
“As utilities continue to modernize their networks through advanced metering systems, grid upgrades, digital technologies, and enhanced measures against electricity theft, system losses should steadily decline—allowing these efficiency gains to translate into meaningful savings for consumers while strengthening the overall performance of the power sector,” the DOE said in a statement.
Energy Secretary Sharon Garin added that the energy sector will also work on the proposed Sariling Kuryente Act, which is designed to make rooftop solar and battery energy storage systems more accessible and affordable for households.
“Our task now is to turn that vision into reality through decisive reforms, stronger investments, and sustained collaboration across government and the private sector,” the DOE chief said.