Rethinking pass-through charges in power bills

Legally, these charges are authorized under the Electric Power Industry Reform Act (EPIRA) and related regulations. Yet legality does not automatically equate to fairness. The growing public dissatisfaction reflects a deeper concern: consumers increasingly feel that they are being asked to shoulder costs over which they have little control and from which they derive uncertain benefits.

The evolution of pass-through charges mirrors the transformation of the power industry since EPIRA’s enactment in 2001. The law sought to liberalize the sector, attract private investment, and improve efficiency. Over time, however, the list of recoverable costs expanded.

Generation charges became vulnerable to fluctuations in global fuel prices and foreign exchange movements. Transmission charges increased as the grid operator recovered investments and under-recoveries. Renewable energy incentives such as the Feed-in Tariff Allowance and Green Energy Auction Allowance were added to support the country’s energy transition. Universal charges continued to fund missionary electrification and stranded debts from past power-sector obligations.

Among the most controversial components is the system loss charge, which allows utilities to recover the cost of electricity lost through technical inefficiencies and, to a limited extent, power pilferage. Although the Energy Regulatory Commission (ERC) imposes caps on recoverable losses, many consumers understandably question why they should pay for electricity they never consumed.

These concerns become more acute because Philippine electricity rates remain among the highest in Southeast Asia. High dependence on imported fuels, inadequate competition in generation, transmission bottlenecks, regulatory delays, and a complex layering of taxes and subsidies all contribute to elevated power costs. The result is reduced household purchasing power, diminished industrial competitiveness, and a heavier burden on small businesses.

The time has come for a comprehensive review of pass-through charges—not to undermine the financial viability of the power sector, but to restore public confidence and improve equity.

Several reforms deserve serious consideration.

First, Congress should revisit EPIRA and evaluate whether certain social policy costs, such as subsidies and missionary electrification, should be funded partly through the national budget rather than solely through electricity consumers.

Second, the ERC should strengthen transparency requirements by providing consumers with simpler and more accessible explanations of every charge appearing on monthly bills.

Third, the allowable system loss recovery mechanism should be reviewed and tightened, with stronger incentives for utilities to reduce technical losses and combat electricity theft.

Fourth, the government must accelerate investments in renewable energy, grid modernization, and energy storage technologies that can lower generation costs over the long term.

Finally, competition in the generation sector must be deepened to ensure that consumers benefit from genuinely competitive pricing rather than merely absorbing higher costs through automatic pass-through mechanisms.

Electricity is not a luxury; it is an essential public necessity. A power-pricing system that is transparent, efficient, and equitable is vital to national development. The current debate over pass-through charges presents an opportunity to pursue reforms that place consumers at the center of energy policy.