Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. __________ 
___________________________________________________________________________ 
Introduced by 
APEC Party-List Representative Sergio C. Dagooc 
PHILRECA Party-List Presley C. De Jesus 
___________________________________________________________________________ 
EXPLANATORY NOTE 
At every stage of the electric system—from generation power plants to 
substations of distribution utilities (DUs) up to household outlets—there are 
bound to be energy losses. System losses are inherent when electricity is 
transported from one place to another due to several reasons such as heat, 
noise, pilferage, and technical losses. The only way to zero-out system loss in 
the power system is to turn the power off.  
In a Senate Committee on Energy hearing conducted last 2017, a number of 
DUs presented simulations if reduction of technical losses to 5% will be 
required from them. Using 2017 financial parameters, Angeles Electric Corp. 
will need to spend P892 million, Cagayan Electric Power and Light Company 
will be needing P1.84 billion, and Meralco would have to spend P65.53 billion. 
Repeated simulations showed that the costs that the utilities will incur in 
investing on infrastructure will significantly outweigh any possible decrease 
in the system loss charge. Capital Expenditure (CAPEX) is a pass on charge 
to the consumers, hence it will eventually lead to electricity rate increases to 
customers. 
Since it is scientifically and technically impossible to eliminate system losses 
completely, governments and electric regulators around the world allow 
electric DUs to recover minimal system loss rates as part of their regulated 
charges. In the Philippines, the Congress enacted the Anti-Electricity Pilferage 
Act of 1994, which set an initial cap on losses that was gradually reduced over 
time. In 2017, the ERC issued a resolution further reducing the cap to its 
present level of 5.50 percent for private DUs and 12 to 8.25 percent for electric 
cooperatives.  
August 9, 2022
5:45 pm
3431


 
Recognizing the urgent need to mitigate the rapid increase of electricity rates 
while also taking into account the viability of distribution operations, this bill 
seeks to regulate and reduce system losses by institutionalizing a set of rules 
on the allowable systems loss cap of electric distribution utilities. As such, 
this measure is ultimately aimed at enhancing the efficiency and 
competitiveness of DUs in their delivery of electric service to the public. More 
importantly, this bill is envisioned to cushion the impact of electricity bill 
spikes to Filipino consumers as well as inflation and impending surges in fuel 
costs and other commodities. 
 
In view of the foregoing, the passage of this bill is earnestly and sincerely 
sought. 
 
 
REP. SERGIO C. DAGOOC 
APEC Partylist 
 
 
 
 
 
 
 
 
 
 
REP. PRESLEY C. DE JESUS 
PHILRECA Partylist 
 
 
 
 
 
 
 
 
 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. __________ 
___________________________________________________________________________ 
Introduced by  
APEC Party-List Representative Sergio C. Dagooc 
PHILRECA Party-List Presley C. De Jesus 
___________________________________________________________________________ 
AN ACT 
INSTITUTIONALIZING THE RULES ON SYSTEM LOSS CAP OF ELECTRIC 
DISTRIBUTION UTILITIES, AMENDING FOR THE PURPOSE  
REPUBLIC ACT NO. 7832 AND REPUBLIC ACT NO. 9136 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. – This Act shall be known as the “Distribution 
1 
System Loss Act of 2022.” 
2 
SECTION 2. Declaration of Policy. – It shall be the policy of the State 
3 
to protect the rights of every electric consumer without compromising the 
4 
State’s obligation to ensure the viability of electric distribution utilities. 
5 
Towards this end, the State shall ensure that the imposition of electricity 
6 
distribution charges to electricity end-users is justifiable and equitable, and 
7 
that no unnecessary cost is recovered by distribution utilities. 
8 
SECTION 3. Transmission Losses. - Transmission losses are hereby 
9 
disaggregated from the computation of allowable system loss charges. These 
10 
losses shall not form part of the passed-on costs to electricity end-users. 
11 
For the purposes of this Act, transmission loss shall mean the difference 
12 
between kilowatt-hour (kWh) delivered by the generation company to a 
13 
distribution utility as indicated in the powerplant billing meter installed at the 
14 
plant gate and the kWh eventually received by the substation of an individual 
15 
distribution utility as indicated in the billing meter installed in the delivery 
16 
point. 
17 
3431


SECTION 4. Distribution System Loss (DSL) Caps for Private 
18 
Distribution Utilities. – Private distribution utilities are hereby allowed to 
19 
pass on system losses to their consumers only to the extent that these system 
20 
losses result from design fault, technical loss, and non-technical losses as 
21 
defined by the Energy Regulatory Commission (ERC), which in no case shall 
22 
be more five percent (5%). 
23 
SECTION 5. Distribution System Loss (DSL) Caps for Electric 
24 
Cooperatives. - Distribution utilities are hereby allowed to pass on system 
25 
losses to their consumers only to the extent that these system losses result 
26 
from design fault, technical loss, and non-technical loss as defined by the 
27 
Energy Regulatory Commission (ERC), which in no case shall be more than 
28 
the following percentages: 
29 
A. Cluster 1 – 12% 
30 
B. Cluster 2 – 10.25% 
31 
C. Cluster 3 – 8.25% 
32 
A system loss charge shall be determined annually based on the 
33 
previous year’s costs and revenues of the distribution utilities which shall be 
34 
verified by the ERC to ensure that only legitimate costs are borne by 
35 
consumers. For the purpose of this Act, system loss shall mean the difference 
36 
between kWh purchased and/or generated and kWh sold by a distribution 
37 
utility. 
38 
SECTION 6. Electric Cooperatives Clusters. – For the application of 
39 
the DSL Caps for Electric Cooperatives, they shall be grouped into three (3) 
40 
clusters namely: 
41 
Cluster 1 
BANELCO 
DIELCO 
MARIPIPI 
PROSIELCO 
TIELCO 
BASELCO 
FICELCO 
MASELCO 
ROMELCO 
TISELCO 
BATANELCO 
IFELCO 
MOPRECO 
SIARELCO 
 
BISELCO 
KAELCO 
OMECO 
SIASELCO 
 
CASELCO 
LUBELCO 
OREMCO 
SULECO 
 
CELCO 
MARELCO 
PALECO 
TAWELCO 
 


 
Cluster 2 
ABRECO 
CASURECO I 
ILECO III 
NEECO 
II 
– 
AREA II 
SAMELCO II 
AKELCO 
CASURECO II 
INEC 
NOCECO 
SOLECO 
ALECO 
CASURECO III 
ISECO 
NONECO 
SOLECO I 
ANECO 
CASURECO IV 
ISELCO I 
NORECO I 
SOLECO II 
ANTECO 
CEBECO I 
ISELCO II 
NORECO II 
SUKELCO 
ASELCO 
CEBECO II 
LANECO 
NORSAMELCO 
SURNECO 
AURELCO 
CEBECO III 
LASURECO 
NUVELCO 
SURSECO I 
BATELEC I 
CENPELCO 
LEYECO I 
PANELCO I 
SURSECO II 
BENECO 
COTELCO 
LEYECO III 
PANELCO III 
TARELCO I 
BILECO 
DANECO 
LEYECO IV 
PELCO I 
TARELCO II 
BOHECO I 
DASURECO 
LEYECO V 
PELCO II 
ZAMECO I 
BOHECO II 
DORECO 
LUELCO 
PELCO III 
ZAMECO II 
BUSECO 
ESAMELCO 
MAGELCO 
PRESCO 
ZAMSURECO I 
CAGELCO I 
FIBECO 
MOELCI I 
QUEZELCO I 
ZAMSURECO II 
CAGELCO II 
FLECO 
MOELCI II 
QUEZELCO II 
ZANECO 
CAMELCO 
GUIMELCO 
MORESCO II 
QUIRELCO 
 
CANORECO 
ILECO I 
NEECO I 
SAJELCO 
 
CAPELCO 
ILECO II 
NEECO II – 
AREA I 
SAMELCO I 
 


 
Cluster 3 
BATELEC II 
PENELCO 
CENECO 
SOCOTECO II 
MORESCO I 
SOCOTECO I 
LEYECO II 
ZAMCELCO 
 
 
The clustering shall be valid for two (2) years. Subsequently and every 
year thereafter, the ERC shall review the clustering of electric cooperatives 
prescribed in this section as deemed necessary. 
SECTION 7. Powers and Functions of the Energy Regulatory 
42 
Commission. – In addition to its functions under Republic Act No. 9136, the 
43 
ERC shall: 
44 
a. Determine, as often as is necessary, whether the caps shall be 
45 
reduced further on the basis of load density, sales mix, cost of 
46 
service, delivery voltage, and other technical considerations, as 
47 
well as international benchmarks, taking into account the viability 
48 
of DUs and ECs and the interest of the consumers; 
49 
b. Exercise the emergency power, when deemed necessary, to increase 
50 
the system loss rates caps as prescribed by this act;  
51 
c. Review and verify the system loss charges reported by distribution 
52 
utilities to ensure that only legitimate costs are borne by the 
53 
consumers. 
54 
Subsequently and every year thereafter, the ERC shall review the 
55 
system loss rates prescribed by this Act based on parameters such as load 
56 
density, sales mix, cost of service, delivery voltage and any other technical 
57 
considerations, as provided in the EPIRA, necessary for establishing different 
58 
caps for distribution utilities. 
59 
SECTION 8. System Loss Reduction Program and Incentives. – The 
60 
ERC shall develop an incentive mechanism to reward distribution utilities 
61 
whose actual system losses are below the prevailing approved caps. The 
62 
incentive mechanism so adopted may be incorporated by the ERC in the 
63 
performance incentive scheme under the performance-based regulation for 
64 
private distribution utilities and in the benchmarking methodology for electric 
65 
cooperatives. Towards this end, expenses associated with any system loss 
66 
reduction program duly approved by the ERC shall be considered part of the 
67 


capital, expenditure plans or programs, and operating costs of distribution 
68 
utilities. 
69 
SECTION 9. Emergency Clause. – The application of allowable system 
70 
loss rates provided in this Act shall be suspended upon the occurence of the 
71 
following: acts of God, riots, war, terrorist act, epidemic, pandemic, civil 
72 
commotion, natural catastrophes, and other emergency circumstances 
73 
wherein the distribution utility is unable to accurately determine the energy 
74 
sold because of damage or loss of consumers billing meters and other facilities 
75 
used in the determination of the consumers energy consumption, as 
76 
determined by the ERC. 
77 
SECTION 10. Implementing Rules and Regulations. – The ERC, in 
78 
consultation with concerned government agencies and stakeholders, shall 
79 
promulgate the Implementing Rules and Regulations necessary to carry out 
80 
and implement the provisions of this Act within sixty days (60) from the 
81 
effectivity of this Act. 
82 
SECTION 11. Repealing Clause. - All laws, presidential decrees, 
83 
executive orders, letters of instruction, administrative rules and regulations 
84 
or parts thereof which are contrary to or inconsistent with the provisions of 
85 
this Act are hereby repealed or modified accordingly. 
86 
SECTION 12. Separability Clause. – Should any part or provision of 
87 
this Act be held unconstitutional or invalid, all other provisions hereof which 
88 
are not affected thereby shall continue to be in full force and effect.  
89 
SECTION 13. Effectivity. – This Act shall take effect after fifteen (15) 
90 
days following its complete publication in the Official Gazette or in two (2) 
91 
newspapers of general circulation whichever is earlier. 
92 
Approved, 
93