Senator Rodante Marcoleta has filed a bill seeking to remove the 12 percent value-added tax (VAT) on the sale of electricity at all stages, in an effort to lower power rates and alleviate the financial burden on Filipino households and businesses.

“The Philippines remains to be one of the Southeast Asian countries with the highest cost of electricity,” Marcoleta cited in his explanatory note in the bill.

Marcoleta argued that removing VAT on the sale of electricity across generation, transmission, and distribution utilities could reduce operational costs, leading to lower electricity prices.

“This would further stimulate economic activity and enhance domestic consumption, thereby contributing to broader and more sustainable economic growth,” Marcoleta emphasized.

“The removal of VAT on electricity sales is likewise anticipated to relieve the financial strain on both consumers and enterprises, thereby supporting the development of a more inclusive and resilient energy system and improving the overall quality of life for Filipinos,” the neophyte senator added.

Marcoleta, whose campaign promise was to lower electricity rates, cited several reasons for the country’s high electricity costs. These include deregulation of power generation, transmission bottleneck, distribution losses, reliance on imported fuel for power plants, and unrealistic regulatory asset base, among others.

“All these result in elevated operating expenses that deter investments, leading to high electricity costs that burden consumers,” Marcoleta stressed.

A year ago, the Philippine Chamber of Commerce and Industry also called on Congress to remove the 12 percent VAT on the sale of electricity from distribution to users, stating that the high cost of electricity in the country is a major complaint among investors.

In 2024 alone, generation charges have climbed several times. Households using 200 kilowatt-hours (kWh) per month have seen an average increase of P0.1839 per kilowatt-hour, due mainly to higher prices at the Wholesale Electricity Spot Market (WESM) and more expensive power supply agreements, which Marcoleta dubbed as “sweetheart deals.”

WESM rates rose by P0.2531 per kWh due to tight supply, while Power Supply Agreements saw a P0.1050 per kWh increase due to a weakening peso.

“As the costs associated with power generation continue to rise, consumers may need to adjust their budgeting for electricity expenses and consider energy-saving measures,” said Marcoleta, who served multiple terms as representative of SAGIP Party-list before winning a Senate seat in the 2025 elections.

''We owe it to the people to make electricity affordable, it being the declared objective of the law itself,” he concluded.