The system loss challenge

THE apparent highlight of President Ferdinand Marcos Jr.’s State of the Nation Address (SONA) last Monday, July 27, was his directive to Congress to eliminate the system loss charge and the value-added tax (VAT) levied on it from consumer electric bills. As I explained in part 1 of this column on Thursday (July 30), removing the VAT is relatively easy, and there are already bills in Congress that intend to do exactly that. Removing the system loss charge is rather more complicated, however, and in order for Congress to even consider doing that, two questions need to be satisfactorily answered: As system loss will still exist whether or not its costs are passed on to customers, who should pay for it? And, what changes to the law and regulatory framework need to be made if the burden of system loss costs is actually taken away from consumers?