Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS,
First Regular Session

HOUSE BILLNO. 160

Introduced by Rep. Rodante D. Marcoleta and Rep. Caroline L. Tanchay

EXPLANATORY NOTE

In a recent comparative study,! the Philippines ranks as having the highest
electrical rate per kilowatt-hour in the whole ASEAN region, more particularly
residential users

Several components account for our electricity billing. An average residential
electricity billing includes System Loss and System Loss Tax of as much as 5.6% of the
electrical bill per kilowatt-hour. Components of System Losses include technical losses
(losses inherent in the physical delivery of electrical energy) and non-technical losses
(not related to the physical characteristics and functions of the electrical system. and are
caused primarily by human error. whether intentional or not — like pilferage).

Republic Act (RA) No. 7832 or the “Anti-electricity and Electric Transmission
Lines/Materials Pilferage Act of 1994” rationalizes and allows the recovery of S:
Loss from consumers capped at 14% for Rural Electric Cooperatives and 9.5% for
Private Electric Utilities at the end of the 5" year and 4" year, respectively, following
the effectivity of said law. Since its enactment in 1994. the issue of pilferage was not
addressed by electric utilities knowing that they could recover these losses from the
consumers. There are also cases of metric errors and billing irregularities borne solely
trom the negligence of the electric utilities. Payment of non-technical system loss only
awards inefficiency and waste

Normal loss is a consequence of natural phenomena and is ofien referred to as
technical systems loss. These losses occur when electricity travels long distances from

power generation plants to the end-users. The longer the distance traveled. the higher
will the system loss be. This is unavoidable as it is inherent in the manner in which
electricity is transmitted and distributed. Undeniably, however, this normal loss is a fact

the Philippines and Selected ASEAN Countries

* Comparative Analysis of Power Prices
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that has been recognized by electric utilities when they decided to venture in this field
Like any other business endeavor, normal losses are deemed legitimate business risks

Passing too much burden of incurring these system losses to the consumers is
not only unfair but also deters the power firms from prioritizing quality and reliable
service knowing that they can readily pass the charges on to the consumers.

This bill seeks to entirely prohibit distribution utilities from passing on non-
technical system losses to consumers and to mitigate the impact of technical system
losses to the minimum. Limiting the phase-out of system losses to a smaller cap will
not substantially impoverize the power firms but will be life-saving to the consuming,
public, especially the poor and marginalized families who can hardly cope up with their
daily needs. We should do the most that we can possibly contribute to alleviate their
predicament.

In view of the foregoing. the immediate approval of this measure is earnestly
sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manita

NINETEENTH CON
First Regular

HOUSE BILL NO.

Introduced by Rep. Rodante D. Marcoleta and Rep. Caroline L. Tanchay

AN ACT
LIMITING THE CAP OF PHASING OUT SYSTEM LOSSES TO CONSUMERS,
AMENDING FOR THIS PURPOSE SECTION 10 OF REPUBLIC ACT NO. 7832

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

SECTION 1. This Act shall be known as “Svsrem Loys Limitation Aet of 2022”

SECTION 2. Declaration of Policy ~ It shall be the policy of the State to provide
equitable and affordable electricity to the consumers without compromising the economic
viability of the energy stakeholders. It is imperative for the energy sector to ensure that there
is a justifiable distribution of expenses as among the consuming public and the distribution
utilities so as not to hamper the continuous and reliable electrical distribution.

SECTION 3. Section 10 of Republic Act No. 7832 is to be read as follows:

“Rationalization af Svstem Losses by Phasing out Pilferage Losses as

a Component Thereof. ~ There is hereby established a cap on the recoverable

rate of system losses as follows

‘a) For private electric utilities: ONE PERCENT (1%) FROM THE
EFFECTIVITY OF THIS ACT.

Fourteen and-a-haltp m}-at-the-end-of the ti

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yearfollowing the eflzetinite ofthis Ack

Gib, Eleven-andthreefourth} H342%)attheend of the thirds
following the-efleetivin-of this Act

ae Nine-and-a-half-pere 1 he-end-of the fourth-5

- " activity


“Provided-Thatthe ERB is hereby authorizedte-d eeadol

he-fe folk ha ohh y-of th -and-as-of
a he-viability of p 1 i th .
th s avhether He caps ti Hherefor-established shall be:
redueed-further-which shall. 1 no case. be Jowerthen nine percent 92 e+ and
cording Jingly fix the date of the effectivity of the new-eaps: Provided,

further, That in the calculation of the system loss, power sold by the NPC or any
other entity that supplies power directly to a consumer and not through the
distribution system of the private electric utility shall not be counted even if the
billing for the said power used is through the private electric utility

~The term “power sold by NPC or any other entity that supplies power
directly to a consumer” as used in the preceding paragraph shall for purposes of
this section be deemed to be sale directly to the consumer if (1) the point of
metering by the NPC or any other utility is less than one thousand ( 1.000) meters
from the consumer, or (2) the consumer's electric consumption is three (3%) or
more of the total load consumption of all the customers of the utility, or (3) there
is no other consumer connected to the distribution line of the utility which
connects to the NPC or any other utility point of metering to the consumer meter.

“(b) For rural electric cooperatives: ONE PERCENT (1%) FROM

‘THE EFFECTIVITY OF THIS ACT.

eenty-1we-g 2906) at the end-of the Fi following th
Mectivity ofthis Act
Ts 094) at the-end-of the-secend-year-f hi
ep 2 y
ij) Fie 18%} at-the-end-ef the third year_foll "
aig p $ ra
eHectiniiy of this Act.
be Seton percent 169) at the end of the fourth year hllentieg the
effectivity of this Act-and-4 Fourteen pet Hite patth
the fifth year following the effectivity of this Act
=Provided-that- the ERB is hereby authorized to-d attheend-of
the fifth-year following the effectivity of this Act-and-as-of ae
taking into-aceount the viability of-rural eleetric-coop dh e
hee ro whether she-eaps-h heretofore-cauabllshed shall-L
reduced-further which shall ease be o percent {9%}-and

di

ly Fis-the date-of the effectivity of the new caps

“Provided, finally, That in any case nothing in this Act shall impair the
authority of the ERC to reduce or phase out technical or design losses as a
component of system losses.”


SECTION 4. Implementing Rules and Regulations (IRR) ~ Within ninety (90) days
from the effectivity of this Act, the Department of Energy (DOE), as the lead agency, together
with the Energy Regulatory Commission (ERC), and other public and private stakeholders
representing consumers and sectors affected by this Act, in consultation with other agencies
involved in the implementation and monitoring thereof, shall promulgate the necessary
implementing rules and regulations of this Act: Provided, That prior to its effectivity, the draft
of the IRR shall be posted at the DOE website for at least one month, and shall be published in
at least two newspapers of general circulation

SECTION 5. Separability Clause - If, for any reason, any provision of this Act or any
part thereof shall be held unconstitutional and invalid, the other parts or provisions of this Act,
which are not affected thereby, shall remain in full force and effect.

SECTION 6, Repealing Clause - All laws, decrees, issuances, orders, letters of
instructions, administrative orders, rules and regulations, or parts thereof, contrary to or
inconsistent with any of the provisions of this Act are hereby repealed, amended, or modified
accordingly

SECTION 7. Fffectivity - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation

Approved,