By Dean Aubrey Caratiquet
Panahon na para tanggalin na natin ang system loss na pinapasa sa consumer.
This brief sentence from President Ferdinand R. Marcos Jr.’s 5th State of the Nation Address (SONA) elicited applause and cheers from lawmakers that reverberated within the Session Hall of the House of Representatives on July 28.
It was in the spirit of this declaration by the President that concerned agencies are now acting to resolve this point of contention that artificially inflates consumers’ electricity bills.
During the Department of Energy (DOE) Post-SONA Action Plan Press Conference on Monday, ERC Chairperson and CEO Francis Saturnino Juan presented the Commission’s action plan in compliance with President Marcos Jr.’s directive.
This plan would kickstart a regulatory process that would see the removal of the value-added tax (VAT) imposed on the system loss charge, which is one of the several line items that have drawn greater scrutiny from the public in recent months after seemingly relentless hikes in electricity prices.
As part of this effort, the Energy Regulatory Commission (ERC) has released for public consultation a draft Resolution declaring the system loss charge as a government-mandated pass-through cost. Under the proposed measure, the charge would not form part of the gross receipts of generation companies and the National Grid Corporation of the Philippines (NGCP) for VAT purposes.
Meanwhile, the public consultation will allow generation companies, distribution utilities (DUs), NGCP, consumers, and other stakeholders to submit comments and recommendations before the ERC issues the final Resolution.
This final Resolution will eventually be transmitted to the Bureau of Internal Revenue (BIR), and may warrant a possible amendment of Revenue Memorandum Circular (RMC) No. 60-2026, which would see system loss charge included among government-mandated charges that are exempted from VAT.
Chairperson Juan said, “If the necessary processes are completed, the system loss charge will be reflected separately on the electricity bill as a VAT-exempt item.”
BIR has earlier granted VAT exemption on other government-mandated electricity charges such as the Lifeline Subsidy, Green Energy Auction Allowance, Universal Charges, Feed-in Tariff Allowance (FIT-All), Energy Tax, and Franchise and Real Property Taxes.
The ERC chief concluded his speech by announcing the Commission’s readiness to implement any amendments to the Electric Power Industry Reform Act (EPIRA), recognizing the Chief Executive’s desire to ease the burden of electricity costs on the citizenry. (with report from Elijah Canlas | PTV News)
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