Consumers and lawmakers cheered the SONA pledge to scrap system loss charges as if Christmas had come early with a gift-wrapped power discount. But electricity has a wicked sense of humor: erase the line item today, and the cost may quietly return tomorrow wearing a different name. After all, no presidential pen can ever repeal the laws of physics.

Why? Because deleting the system loss line from the bill does not eliminate the cost. Rewrite EPIRA all you want, but the expense will simply be moved, renamed, or folded into other tariff components—including the performance-based rate (PBR) reset of power utilities. Electricity follows arithmetic, not political rhetoric—so who are we fooling? The main question consumers should ask is this: Will that really reduce rates? And the resounding answer is almost certainly: NO!

As the old saying goes, there are many ways to skin a cat—and in the Philippine power sector, many ways to move a cost without truly removing it. Consumers may celebrate a “scrapped” system loss charge in media news cycles, only to find the same burden eventually returning through another tariff window.

Energy Secretary Sharon Garin’s declaration that amending EPIRA for system loss removal could take a year should already temper expectations. Political headlines have a short shelf life—often shorter than an electricity bill’s due date. Perhaps the government’s convenient hope is that by next year, when the applause has faded and the stories are buried, the public will have also forgotten the promise.

Nevertheless, deeper scrutiny reveals an uncomfortable irony: stripping away system loss charges could hurt consumers twice. First, as already stated, the cost will not vanish; it will simply hide under another cost bucket, creating fake savings. Second, a sudden policy shift in the middle of the investment game sends a warning signal to capital markets. Higher uncertainty entails a heftier risk premium, which redounds to more expensive financing and ultimately higher electricity costs passed on to consumers. The final reckoning: a policy designed to make power cheaper could end up making the entire electricity system far more prohibitive.

Even in the world’s best-run power systems, system losses still exist; no one operates at 100% efficiency. Physics does not negotiate, and power grids do not run on mere political directives. The goal is not zero loss, but lower loss achieved through smarter engineering approaches and massive investments that must be prudently recovered. If you starve utilities of investment recoveries, the outcome will not be cheaper electricity, but weaker grids and unreliable power. A world-class power grid cannot be built on empty pockets.

So, whoever advised the President on that declaration may have critically skipped a basic lesson on how electricity works—aside from handing him the international spectacle of second-hand embarrassment. Before rewriting power sector rules, perhaps a crash course on “Introduction to Energy Science” at the DOE’s newly inaugurated Energy Museum would be a good starting point, because it is necessary to first understand the science behind the switch.

Consumers must choose: a feel-good cost-reduction illusion wrapped in optics-driven political statements, or the hard work of fixing the power sector? A promise that ignores engineering constraints may sound good on stage, but it will not make electricity cheaper. Real reform is rarely glamorous—it is technical, disciplined, and unpopular. The power sector does not need more political theater; it needs reasonable solutions.

In a recent media briefing, Meralco Chairman Manuel V. Pangilinan refused to sell the easy version of the story. Instead of blaming system loss on simple performance gaps, he confronted the uncomfortable truth when he said that system loss “is not a question of inefficiency. It is just the way it is, and there’s a cost to it,” adding that the real debate is not whether the cost exists, but who will shoulder it.

He similarly framed the issue in its harshest terms, emphasizing that the cost involved is simply too massive for the power industry to absorb on its own. He asked the blunt question: “Who’s going to pay for that? The industry? It’s going to cost tens of billions of pesos. Will [they] not survive?”

The remarks from the country’s largest power utility chief may have struck sensitive nerves, but he refused to join the circus of pretending that costs disappear under unviable policies. Instead of endorsing a backdoor strategy of burying system loss charges elsewhere in the tariff, Pangilinan chose the harder path: telling consumers the words nobody wants to hear. A transparent bill may hurt, but a disguised bill is far more dangerous.

During a Senate Committee on Energy hearing, Energy Regulatory Commission (ERC) Chairperson Francis Juan put a price tag on system loss reduction—and it does not come cheap. He specified that cutting just 1% of losses in Meralco’s franchise area would require an estimated ₱14 billion investment (₱13 billion in operating expenses and ₱1 billion in capital spending). That clearly conveys that reducing losses is not achieved by deleting a line item from a bill; it requires billions in investments and sustained effort to improve the power system.

For technical losses alone, forcing Meralco to absorb the full cost would mean a staggering ₱30 billion hit. Even regulators recognize that a burden of that magnitude is no minor adjustment; it is a serious threat to the financial stability of the country’s largest power utility.

Let’s put some numbers into perspective: Meralco’s ₱51 billion income in 2025 is not purely from distribution operations. Only ₱29 billion came from its core utility business, while the remainder stemmed from other ventures, including power generation investments under its MGen subsidiary. Judging from that, a multibillion-peso system loss burden could push the core utility business into rapid financial erosion.

If financial strain can shake a giant like Meralco, the risk is far greater for electric cooperatives (ECs) that already operate on paper-thin margins. Ultimately, bankrupt utilities do not protect consumers; they push them to the front lines of another damaging power crisis.

This is precisely why Atty. Janeene Colingan, executive director and general manager of the Philippine Rural Electric Cooperatives Association (PHILRECA), forthrightly stated that if the government removes the system loss recovery mechanism, it must provide the subsidy support needed to prevent ECs from being pushed toward financial collapse.

It is worth noting that EPIRA was not crafted on wishful thinking. It recognizes the irrefutable fact that utilities must remain financially viable to keep serving the public. Grid improvements and loss reduction require capital, and such costs must be recovered prudently. Reliability is not free; it comes with a price tag.

You don’t need a PhD in economics or energy policy to understand investment recovery. Even a small business owner knows the basic rule: money put into a venture must eventually return, or the business fails. The power sector is no different. Utility investments are not charity; they are the lifeline that keeps systems running and improving to serve millions of consumers.

The ultimate danger is dragging the country back toward another crippling power crisis, where unreliable electricity becomes a barrier to growth. The damage would extend far beyond higher bills: lost competitiveness, chilled investor confidence, and slower tourism growth, among other setbacks.

Therefore, the question is whether President Marcos wants his legacy tied to a popular promise that delivers painful consequences. History is unforgiving to leaders who trade long-term national interest for short-term political applause.

System loss is not a Philippine invention; it is a universal reality built into every electricity network. The world’s best utilities do not eliminate losses through policy declarations; they reduce them through capital investments, technological advancements, and operational efficiency—and above all, they don’t pretend legislative acts can defy physics.

Globally, system losses are often fused into broader transmission and distribution (T&D) costs instead of appearing as a separate line item on electric bills, largely because many utilities remain vertically integrated or non-deregulated. But changing the label does not change the fundamentals: losses exist, they cost money, and someone must ultimately pay for them—either consumers through electric bills or governments through subsidies.

Based on World Bank data and international studies on T&D losses, neighboring Asian economies logged system losses as follows: Malaysia at seven to eight percent, Thailand at six to seve percent, Indonesia at six to eight percent, Vietnam at seven to eight percent, and Cambodia at roughly 12 percent. Even efficiently managed power systems in Asia record measurable system losses: Japan at roughly five percent, China at three to five percent, South Korea at three to four percenr, and Singapore at two to three percenrt.

Similarly, advanced economies with highly sophisticated grids continue to record losses: the United States at five to six percent, the United Kingdom at six to eight percent, Germany at four to five percent, Australia at five to seven percent, France at five to seven percent, Canada at four to five percent, Mexico at 10 to 12 percent, Brazil at 13 to 15 percent, Spain at eight to nine percent, Italy at six to seven percent, and the United Arab Emirates at four to five percent.

The point is simple: there is no shortcut to lower system losses. Intelligent leaders achieve it through relentless investment in modern grids, smart technologies, and curbing electricity theft—not through political speeches. Deny utilities the ability to recover those costs, and today’s optics-driven reform will become tomorrow’s blackout crisis.

Even the World Bank’s analysis of T&D losses points to pragmatic solutions: preserve utilities’ financial viability while aggressively pursuing efficiency, distinguishing between unavoidable technical losses and preventable non-technical losses. The prescription is not to erase legitimate cost recovery, but to combine regulated recovery mechanisms with performance incentives, efficiency caps, and strict accountability for commercial waste.

Now, if bets were open, do we place our chips on that SONA promise standing for “Speech Only, No Action”? After all, the roars of politics are notoriously fleeting, but rising electricity bills have a stubborn habit of arriving every month.