Sen. Mark A. Villar is pushing for changes in electricity billing that could give consumers some relief from high power costs.
Villar has filed Senate Bill No. 2392, which seeks to remove the 12-percent value-added tax (VAT) on system loss charges imposed by distribution utilities and electric cooperatives.
The proposed measure would amend Section 109 of the National Internal Revenue Code and cover recoverable technical and non-technical system losses approved by the Energy Regulatory Commission (ERC).
Why Consumers Pay for System Loss
System loss refers to electricity that is generated but does not reach the customer. Some losses are unavoidable as electricity passes through power lines and other equipment. These are known as technical losses.
Other losses are considered non-technical and may result from electricity theft, faulty or inaccurate meters, unrecorded consumption and human errors.
Current regulations allow utilities to recover certain system losses from consumers. These charges can account for about 5 percent to 6 percent of an electricity bill. Consumers are also required to pay VAT on the amount.
Villar said this creates an unfair situation because households are effectively being taxed on electricity they never consumed.
“If the consumer did not use the electricity, he should not be charged tax for it,” Villar said, adding that families already face steep electricity bills.
ERC Also Backs VAT Removal
Villar’s proposal comes as policymakers explore ways to make electricity more affordable.
The ERC has previously recommended removing VAT from system loss charges. The regulator’s position is that VAT should be imposed on electricity actually consumed by customers, rather than on power lost before reaching them.
The senator said the issue deserves urgent attention amid persistently expensive electricity rates in the Philippines. He cited June 2026 data showing that the country remains among the nations with the highest electricity costs in Southeast Asia and Asia.
Savings Could Help Filipino Families
Villar said eliminating the VAT on system loss charges would make electricity billing more reasonable and could reduce the amount households pay each month.
He emphasized that consumers should get greater value from every peso included in their power bills.
Even modest savings, he said, could give families more room in their budgets for essential expenses such as food, transportation, medicines and education.
For Villar, removing the tax is a straightforward measure that can provide consumers with tangible relief while efforts to bring down overall electricity costs continue.
