Ilocos Norte 1st District Rep. Sandro Marcos has filed a bill seeking a major overhaul of the country’s electricity subsidy system, proposing to replace the existing cross-subsidy scheme with a direct government-funded program.
House Bill No. 2700, or the proposed Free Electricity for Low-Consumption Households Act, would scrap the current framework where higher electricity consumers shoulder part of the cost for low-consuming households.
Instead, the national government would directly finance the subsidy, with the subsidized portion exempted from the 12% value-added tax (VAT).
“In enacting this measure, Congress affirms that electricity is a necessity which the State must make affordable and accessible,” Marcos said.
He cited a December 2024 study by the Philippine Institute for Development Studies, led by Dr. Kris A. Francisco, which found that even low-income families may inadvertently contribute to subsidizing beneficiaries under the present system.
Marcos also noted that the subsidy remains subject to VAT, effectively taxing both contributors and recipients.
Under HB 2700, households whose average monthly electricity consumption over the preceding three months does not exceed 135 kilowatt-hours (kWh), or whose monthly bill does not go beyond ₱2,000—whichever is lower—would qualify for the subsidy.
Eligibility would be certified by the Energy Regulatory Commission and the Department of Energy.
If a household exceeds the threshold in a given billing period, it would pay the full amount for that month without subsidy, but this would not automatically disqualify it from future benefits once the criteria are met again.
Distribution utilities would be required to issue zero-charge electricity bills to validated households and submit reimbursement claims to the DOE, subject to strict auditing by the Commission on Audit.
To ensure a smooth transition, the bill provides for a two-year overlap period during which the new direct subsidy system would operate alongside the existing lifeline rate and other electricity assistance programs.
The filing comes amid related national developments, with President Ferdinand Marcos Jr. recently announcing that beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps) would automatically qualify for a lifeline subsidy, including free coverage of the first 50 kWh of their monthly electricity consumption.