ERC poised to remove VAT from power distributors' system loss charges

MANILA – The Energy Regulatory Commission (ERC) is moving to strip value-added tax from system loss charges levied by electricity distributors, a long-contested fee that has faced mounting consumer opposition. ERC Chairperson Francis Saturnino Juan disclosed the development during a congressional budget hearing on Wednesday, indicating that implementation could commence as early as next month. The commission has already issued Resolution No. 26, establishing the regulatory groundwork for the VAT exemption on these charges, which electricity distributors have traditionally passed on to consumers as part of their monthly bills. System loss charges compensate distributors for electricity lost during transmission and distribution, but the inclusion of VAT on these fees has drawn repeated criticism from consumer advocates and lawmakers who argue it amounts to taxation on an already contentious expense. The ERC's action represents a potential relief measure for Filipino households and businesses struggling with rising electricity costs, though the full impact of the VAT removal remains to be quantified once the framework takes effect.