QUEZON CITY, 24 August 2026 –– Consumers should not be made to pay for system losses that electric distribution utilities can prevent. The Institute for Climate and Sustainable Cities (ICSC), in a recent position paper, is calling for reforms that distinguish unavoidable technical losses from preventable losses caused by electricity theft, illegal connections, meter tampering, billing errors, and other operational failures.
The call comes amid renewed public debate over system loss charges following President Ferdinand Marcos Jr.’s 2026 State of the Nation Address, with consumers questioning why they continue to bear charges for electricity they did not consume. While some electricity is inevitably lost as it moves through power lines and other network equipment, not all losses arise from the same causes or should be treated the same way in electricity pricing.
The key question is not simply whether system losses should appear on electricity bills, but which losses consumers should reasonably be expected to pay for.
Technical losses occur inherently as electricity flows through power lines, transformers, and other network equipment. These losses are an unavoidable part of operating an electricity system, although they can be reduced through proper maintenance, network upgrades, improved system design, and modern technologies.
Non-technical losses, however, result from electricity pilferage, unauthorized consumption, faulty metering, inaccurate billing, and other operational problems that are largely preventable.
For consumers who pay their electricity bills, the distinction matters. Costs arising from electricity that is consumed without payment or from preventable operational failures should not automatically be treated in the same way as losses that are inherent to the physical delivery of electricity.
The current debate has focused heavily on the visibility of system-loss charges, while the underlying causes of those losses have received far less attention. The more important policy question is how utilities are managing losses and whether preventable losses are being reduced.
“Consumers shouldn’t pay for losses utilities could have prevented. A fair system rewards utilities that cut losses and holds them accountable when they don’t,” said ICSC’s Senior Policy Advisor Atty. Pedro H. Maniego.
A performance-based approach would require distribution utilities and electric cooperatives to report technical and non-technical losses separately, meet transparent loss-reduction targets, and demonstrate concrete efforts to reduce preventable losses before those costs are passed on to consumers.
Modernization should also be part of the reform. Smart meters, digital monitoring systems, distribution automation, geographic information systems, and data analytics can help utilities detect illegal connections, improve meter accuracy, identify abnormal consumption, and strengthen billing systems.
System loss reform should form part of a broader effort to make electricity more affordable by reducing avoidable losses, improving utility performance, strengthening regulatory oversight, and accelerating grid modernization. Such a framework would better protect consumers, improve utility accountability, and support a more efficient and modern electricity sector.
ABOUT
The Institute for Climate and Sustainable Cities is a Philippine-based non-governmental organization that advances climate, energy, and low-carbon solutions to enable fair and climate-resilient development at the national and international levels.
CONTACT
Sanaf Marcelo, ICSC: media@icsc.ngo, +63 968 886 3466, +63 917 149 5649
Photo by Donna Mae Moltio on Unsplash
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