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Philippines President Marcos forced to address country’s high electricity rates
Just last month, the Philippines officially overtook Singapore with having most expensive electricity rates in Southeast Asia
- PUBLISHED: Thu 30 Jul 2026, 10:17 AM
The most applauded portion of Philippine President Ferdinand Marcos Jr.’s State of the Nation Address (Sona) last Monday referred to how the country’s power industry bills consumers, saying it is time to amend the power industry law that allows system loss charges and associated taxes.
“It is time to eliminate the system loss charge that is being passed on to the consumer…It is not the consumer’s fault why there was a system loss. So it is not right that they should be the ones to pay for it," said Marcos.
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The gallery erupted in cheers, with Marcos’s allies even giving him a standing ovation.
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Just last month, the Philippines officially overtook Singapore with having most expensive electricity rates in Southeast Asia. Amid various impacts of the Middle East war on the Philippines, its average power prices hit P12.43 per kilowatt-hour (kWh), edging past Singapore’s P12.34 per kWh.
What is a system loss charge?
A system loss charge is a fee on electricity that enters a distribution network but is lost before reaching end-users. It accounts for roughly six per cent of a typical Filipino household’s monthly expense. An additional 0.5 to 0.7 per cent is added to this as value-added tax (VAT) to the specific charge.
Systems losses are electricity that are either lost naturally while it passes through wires, transformers and distribution equipment from the power plant to households or to electricity theft, illegal connections (pilferage), defective equipment, or billing calculation errors.
The country’s Electric Power Industry Reform Act (Epira) of 2001 allows distribution companies to charge consumers for these losses. Legislators of the Makabayan Coalition have long fought against the practice, arguing it should be the companies who should shoulder it as part of doing business and not make it a burden on poor consumers.
Distributor balks
Philippines’ biggest power distributor Meralco quickly opposed Marcos’ policy directive. Manila Electric Company (Meralco) president and chief executive officer Manuel Pangilinan said the proposal will entail costs “too big” for power industry players to assume on their own.
In a press briefing after Marcos’ speech, Pangilinan said system losses are not a question of inefficiency. “When you push electricity through copper wires, there will be a resistance. The longer the lines are, the more the losses will be,” he explained.
“So, who’s going to pay for that? The industry? It’s going to cost tens of billions of pesos,” the billionaire Pangilinan said.
As the country’s biggest power distributor with about 8.3 million consumers, Meralco declared a record-high net income of P51.13 billion (Dh3.06 billion) in 2025, marking an 11 per cent increase from P45.85 billion in 2024.
In this year alone, from January to July 2026, Meralco increased electricity rates five times, citing pass on effects of the Middle East war. In just six months, Meralco matched the total number of rate increases recorded during the whole of 2025.
Most Filipino households, on the other hand, earn P22,000 (Dh1,315.60) or less a month, spending 12 per cent or P2,640 (Dh157.87) on electricity alone.
High rates killing small businesses
Like most small Filipino business owners, restaurateur Jaime Hernandez Jr. struggles with high electricity rates. Restaurants need more electricity for large refrigerators, coffee machines, air-conditioning, dishwashing and other equipment, the Philippines’ first coconut-based restaurant owner said.
“[We] are struggling with the rising cost of living and doing business. Meralco’s P0.34 per kWh rate increase (three weeks before Marcos’ Sona) scaled up fast,” he said. “If a workspace consumes 3,000 kWh a month, the automated bump of around P1,000 from this month's adjustment alone is a heavy blow to our operational budget,” the spokesperson of MSME (micro, small, medium enterprise) coalition Negosyo (business) Advocates added.
Negosyo Advocates said it is wrong for small businesses to carry the burden of high power rates. “Many of us already pay electricity bills ranging from tens of thousands of pesos every month,” he revealed.
MSMEs make up 99.63 per cent of all registered businesses in the Philippines.
“High electricity costs reduce our competitiveness, force us to increase prices of products and services, delay expansion plans, and may even lead to job losses or business closures,” the group said.
Consumers shouldn’t hold breath
However, Hernandez will have to wait longer for the benefits of Marcos’ policy directive to take effect. Department of Energy secretary Sharon Garin said the complete removal of system loss charges may take more than a year.
“It’s not that easy. We can issue policies but the implementation side of the electric cooperatives…it will really take time,” Garin said.
Makabayan, meanwhile, challenged Marcos to repeal the Epira law altogether. “It only institutionalised a profit-driven power industry that has burdened Filipinos with persistently high electricity rates,” said Gabriela Representative Sarah Elago.
"What the Filipino people need is not cosmetic change [but] the adoption of policies that recognize electricity as an essential public service, not a business for the benefit of a few,” Elago added.