Republic of the Philippines \

House of Representatives \
Quezon City

‘SEVENTEENTH CONGRESS
‘Second Regular Session

HOUSE BILL No. 6341

Introduced by REP. RODEL M. BATOCABE, REP. ALFREDO A. GARBIN, Jr.,
REP. CHRISTOPHER S. CO

AN ACT
PROHIBITING POWER DISTRIBUTION UTILITIES FROM COLLECTING SYSTEM
LOSSES FROM CONSUMERS, AMENDING FOR THE PURPOSE REPUBLIC ACT
NO, 7832, AS AMENDED

EXPLANATORY NOTE

This bill seeks to prohibit power distribution utilities from collecting system losses from
consumers.

System losses is the unbilled power caused by pilferage and physical loss of energy when
electricity passes through distribution lines. RA 7832, as amended by RA 9136, provides that
distribution utilities can recover a portion of system losses which shall be determined by the
Energy Regulatory Commission based on load density, sales mix, cost of service, delivery voltage
and other technical considerations it may promulgate. There is therefore no fixed rate or amount
of system losses that is passed on to consumers or the captive market.

Consequent to these laws, power distribution utilities have become increasingly inefficient
in addressing system losses and being remiss in preventing pilferage, since they can pass this on
to consumers.

It is the height of inequality when we continuously pass on to consumers the cost of this
system loss. For one, it is an added burden and an indirect increase in the price of electricity that
they pay for. Also, this practice encourages the inefficiency of power distribution utilities when
they are allowed to pass on system losses to consumers—expenses which should be their
responsibility incidental to the grant of their franchise

This bill is, therefore, aimed at enhancing the efficiency and competitiveness of distribution
utilities, As such, under the measure, they are given seven (7) years to pass on the cost of their
inefficiency but only up to 5%. The cap is provided as we do not want a measure that will give
incentive to distribution utilities to be complacent and maintain their inefficient service. This bill
further prohibits distribution utilities to pass on their capital expenditure for improving efficiency
and minimizing system loss because as private enterprises, it should be part of their investment to
improve their competitiveness and profitability, Hence, it is anathema to private enterprises to
invest and later recoup their profits from their expenditure


Finally, this bill is envisioned to lower the electricity bill of our consumers, which has
remained one of the highest in Asia, if not the world. The decrease in electricity bill, needless to
say, will bring huge benefits not only to our consumers, but to the community and our country.

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Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
‘Quezon City

SEVENTEENTH CONGRESS
‘Second Regular Session

HOUSE BILL No._§341

Introduced by REP. RODEL M. BATOCABE, REP. ALFREDO A. GARBIN, Jr.,
REP. CHRISTOPHER S.CO

AN ACT
PROHIBITING POWER DISTRIBUTION UTILITIES FROM COLLECTING SYSTEM
LOSSES FROM CONSUMERS, AMENDING FOR THE PURPOSE REPUBLIC ACT
NO. 7832, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Prohibition on Recovery of System Losses-Private power distribution utilities,
granted franchise by Congress, shall be allowed to collect system loss at a cap of 5% for the first
seven years after the enactment of this law. After this period, such distribution utilities shall be

prohibited from collecting system losses from consumers.

SECTION 2. Prohibition Against Charging of Capital Expenditure ~ Any expense s incurred by
private power distribution utilities in the enhancement and upgrading of their facilities and
infrastructures to minimize system loss shall not be passed on and charged, in whatever form, to

consumers.

SECTION 3. Separability Clause — Should any provision of this Act be declared unconstitutional,
the remainder thereof not otherwise affected shall remain in full force and effect.

SECTION 4. Repealing Clause. — Al other existing laws, presidential decrees, executive orders,
proclamations or administrative regulations that are inconsistent with the provisions of this Act

are hereby repealed, amended or modified accordingly.


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SECTION 5. Effectivity - This Act shall take effect fifteen (15) days following the completion of
its publication in the Official Gazette or in two (2) newspapers of general circulation,
Approved,