Visayan Electric reduced its September residential rate by P0.07 per kilowatt-hour to P14.89, avoiding a projected surge to P21.24 through IEMOP negotiations and ERC price caps.
Sen. Jinggoy Estrada filed Senate Bill 2474, the System Loss Charges Abolition Act, to ban utilities from passing technical and non-technical transmission losses onto consumers.
Visayan Electric president Mark Anthony Kindica welcomed the ERC safeguards, while Gov. Pam Baricuatro plans an October Energy Summit to address regional supply challenges.
CONSUMERS in Metro Cebu and neighboring areas will see slightly lower electricity bills in September as Visayan Electric reduces its residential rate by P0.07 per kilowatt-hour (kWh).
The overall rate will decrease to P14.89 per kWh from P14.96 per kWh in August. While the drop is marginal, it prevents a projected surge that could have pushed rates to P21.24 per kWh during a period of supply constraints.
This adjustment comes after a volatile nine months for Visayan Electric consumers. Rates initially dipped from P12.79 in January to P12.36 by March, but climbed steadily through the succeeding months to reach nearly P15 by August.
Price caps and deferments
The utility company attributes the September reduction to two main factors: negotiations with the Independent Electricity Market Operator of the Philippines (IEMOP) to defer certain charges and a revised secondary price cap mechanism by the Energy Regulatory Commission (ERC).
The ERC’s updated guidelines established regional price safeguards. This mechanism is designed to shield consumers in the Visayas from severe price spikes during supply shortages, providing immediate relief even when electricity prices remain stable in other regions.
“We warmly welcome the ERC’s regional price safeguards, which provide crucial financial breathing room for the families and small businesses we serve,” Visayan Electric president and general manager Mark Anthony Kindica said.
Targeting system losses
While local interventions prevented a drastic rate hike in Cebu, lawmakers at the national level are moving to eliminate another long-standing burden on power consumers across the country: system loss charges.
Sen. Jinggoy Estrada is pushing for Senate Bill 2474, or the proposed System Loss Charges Abolition Act. The measure aims to stop distribution utilities and electric cooperatives from passing the cost of lost electricity onto consumers.
System losses refer to electricity that dissipates during transmission and distribution due to technical factors involving conductors, transformers, and networks. The term also covers non-technical losses, such as meter tampering, reading errors, and pilferage.
Under current rules, consumers pay for this lost power. Estrada’s bill seeks to classify these expenses as non-recoverable costs for utility companies, shifting the financial burden away from households.
“This measure seeks to rectify the ongoing injustice imposed against Filipino consumers who assume the responsibility of paying for electricity lost through no fault of their own,” Estrada said.
To ease the current burden, the government has already removed the value-added tax on allowable system-loss charges, a separate measure expected to shave about P20 from a typical consumer’s monthly bill. However, the proposed legislation aims for a complete abolition of the charge itself.
The bill proposes strict penalties to ensure compliance. A first offense would result in a P5-million to P10-million fine and a mandatory full refund of the prohibited charges with interest. Subsequent violations could lead to the suspension of utility executives and prompt the ERC to recommend the revocation of a company’s franchise.
Industry capacity and future measures
Eliminating system loss charges entirely has drawn support from several lawmakers, including Senate President Sherwin Gatchalian, and Senators JV Ejercito and Francis Pangilinan.
During a Senate inquiry, the ERC indicated that while system loss charges could eventually be reduced to zero, regulators must consider the financial limitations of smaller utility providers. To address this, Estrada’s bill directs government energy agencies to assist utilities in modernizing their infrastructure to physically reduce system losses, prioritizing electric cooperatives in geographically isolated areas.
Meanwhile, local efforts to stabilize power supplies continue in the Visayas. Visayan Electric is encouraging large industrial consumers to join its Interruptible Load Program, which reduces grid demand during supply constraints.
Cebu provincial officials and energy stakeholders are also preparing for an Energy Summit in October led by Gov. Pam Baricuatro. The event will gather government leaders and energy partners to directly address local supply challenges and formulate long-term energy policies for the province. / DPC, PNA