Senate Committee on Energy Chairman Erwin Tulfo pushed back on Thursday against the Manila Electric Company (Meralco), rejecting its argument that abolishing non-technical system loss charges would eventually drive up electricity rates.
During a Senate hearing on proposed bills seeking to eliminate system loss fees, Tulfo argued that distribution utilities should absorb ordinary operational losses instead of shifting the burden onto power consumers.
Addressing Meralco Senior Vice President and Head of Regulatory Management Jose Ronald Valles, the senator dismissed the utility’s claim that eliminating charges from electricity theft and illegal connections would require capital investments that could ultimately inflate tariffs.
”I totally disagree with your explanation,” Tulfo said.
”You are a business, while at the same time providing a public service,” he emphasized. “Business, sir, ay may mga losses. Dapat you have to be prepared for that. Pinag-aralan ko po sa eskwelahan yun eh. Normal po yun sa isang negosyo na magkaroon ng losses.”
Tulfo maintained that power companies must account for operational risks like theft or property damage as standard business overhead. He also questioned why customers should finance additional personnel hired to combat illegal connections.
”That is your business. We are not part of Meralco. We are your consumers and customers,” he added.
”The people are the ones who suffer,” Tulfo stated. “We are not a rich country. The money used to pay these charges could have been spent on food.”
Valles defended Meralco’s stance, explaining that reducing non-technical system losses to zero demands heavy investment in inspection crews, field security, and anti-pilferage technology—costs that could be evaluated by the Energy Regulatory Commission (ERC) for inclusion in utility rates.
He noted that Meralco’s total system loss in 2025 stood at 4.22%, well below the ERC’s 5.5% cap, with non-technical losses making up less than 1%.
Valles clarified that losses beyond the regulatory cap are already absorbed by distribution utilities and that funds recovered from electricity theft enforcement are credited back to consumers to lower generation costs.
Meanwhile, ERC Chairman Francis Saturnino Juan noted that non-technical losses represent only 1% to 1.5% of total system losses. He indicated that removing these recoverable charges would not compromise power sector stability and would likely incentivize utilities to enforce stronger anti-theft controls.
Energy Undersecretary Riolita Inocencio supported this perspective, stating that a lower allowable loss cap could function as a self-regulating mechanism to drive operational efficiency across distribution utilities and electric cooperatives.