DOE Targets Phased Removal of Non-Technical System Loss Charges to Lower Power Bills

 

The Department of Energy is moving to reduce a portion of the system loss charges shouldered by electricity consumers, with a P7.5-billion program designed to eliminate non-technical losses from the power bills of customers served by electric cooperatives.

The initiative is expected to lower electricity costs by roughly four percent once fully implemented. However, consumers should not expect the complete removal of system loss charges before President Ferdinand Marcos Jr. delivers his final State of the Nation Address next year.

Energy Undersecretary Rowena Cristina Guevara said the government will prioritize non-technical losses because these are more readily addressed through enforcement, improved utility management and tighter controls than infrastructure-related losses.

Four-Phase Plan for Lowering Consumer Charges

The DOE plans to introduce the program gradually rather than eliminate non-technical system losses in a single step.

The proposed implementation sets four reduction targets:

• Phase 1: 25 percent reduction
• Phase 2: 50 percent reduction
• Phase 3: 75 percent reduction
• Phase 4: 100 percent elimination

Electric cooperatives currently record an average system loss of about 10.45 percent. Guevara said approximately four percentage points of that figure are attributed to non-technical losses, including electricity pilferage and illegal connections.

The distinction is important because not every system loss can be prevented through enforcement. Some electricity naturally dissipates as it moves through power lines and other distribution infrastructure. These technical losses require physical improvements to the network, while non-technical losses are generally linked to theft, meter tampering, illegal connections and operational weaknesses.

Where the P7.5 Billion Will Go

The government program will concentrate on measures intended to prevent electricity from being consumed without being properly recorded and billed.

Key components include stronger anti-pilferage operations, public education, improvements in billing and collection, better meter management, system audits and the cleanup of consumer databases. The DOE also plans to strengthen institutions and pursue policy and regulatory changes needed to sustain lower loss rates.

In practical terms, the strategy treats electricity losses much like leakage in a water distribution system. Before investing heavily in replacing the entire network, authorities can first address preventable leaks caused by unauthorized connections, inaccurate monitoring and weak collection systems.

Technical Losses Require a Separate Strategy

The more difficult challenge involves technical system losses, which generally require substantial investment in physical infrastructure.

Electric cooperatives report average technical losses of about six percent. Reducing these losses could require upgrades to distribution lines, substations and other components of the electricity network.

The DOE, Energy Regulatory Commission and National Electrification Administration are developing a separate framework for this issue, with completion targeted for July 2027.

The government is sequencing the reforms because non-technical losses can be tackled more quickly and with less capital expenditure. Infrastructure modernization, by comparison, requires engineering work, procurement and significant investment.

DOE Pushes Tougher Action Against Electricity Theft

Energy Secretary Sharon Garin said the DOE is also coordinating with stakeholders on proposed amendments to the Electric Power Industry Reform Act and the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act.

One major focus is the introduction of stronger penalties for electricity theft.

Under Republic Act 7832, individuals convicted of illegally using electricity may face imprisonment, a fine of up to P20,000, or both.

The DOE has also launched Brigada Kontra Jumper, a campaign encouraging consumers to report suspected illegal connections and tampered meters through the eGovPH platform.

The initiative places public participation alongside enforcement as part of the government's broader effort to reduce losses and prevent legitimate customers from absorbing costs associated with electricity theft.

Consumer Groups Demand Greater Utility Accountability

The push to reduce system losses has also drawn support from the Institute for Climate and Sustainable Cities, which argues that consumers should not be charged for losses that electricity providers can reasonably prevent.

The Manila-based think tank is advocating reforms that clearly separate unavoidable technical losses from preventable losses caused by electricity theft, illegal connections, meter tampering, billing problems and other operational deficiencies.

Such a distinction could create stronger incentives for utilities to improve their systems. Providers that successfully reduce preventable losses would have greater reason to maintain efficient operations, while persistent avoidable losses could face closer regulatory scrutiny.

For consumers, the broader objective is straightforward: electricity charges should reflect legitimate costs of delivering power, rather than preventable inefficiencies that utilities are capable of controlling.

The DOE's phased approach therefore represents an initial step toward reshaping how system losses are managed and ultimately paid for. The immediate target is non-technical loss reduction, while a longer-term infrastructure strategy is being prepared to address the technical portion that remains embedded in the power distribution system.