FOLLOWING THE PRESIDENT’S pronouncement that systems losses from electricity distribution should not be charged to consumers– which gained people’s massive support, Senate President Sherwin Gatchalian, in a hearing at the Senate said that distribution utilities should not pass the burden on to the hapless consumers.
Gatchalian posed the question “who should shoulder the cost of the system loss? Definitely not the consumers.”
Gatchalian addressed the question raised by Manila Electric Company (Meralco) chairman Manuel V. Pangilinan, who said that the system loss charge is too big a cost for the industry.
“As Mr. Pangilinan mentioned: Who should shoulder the system loss? Obviously, we do not want consumers to pay for it. That is why eight lawmakers filed bills seeking to remove the system loss charge” Gatchalian said.
“We believe the distribution companies should shoulder that cost. And it will be part of their cost or expense in generating electricity or in transmitting electricity,” he said.
This way, he said, the DUs would be forced to be more efficient, noting that at present there is currently no pressure on them to reduce the system loss since they simply pass it on to consumers.
“Now that it will become part of their costs, they will be forced to bring down—or even remove the system loss, especially its technical aspect. As for non-technical system loss, they should just work with the police or the barangays to apprehend those using illegal electricity connections. That way, non-technical system loss can be completely eliminated,” the Senate chief was quoted by Inquirer.
“But the point of the matter there, is that consumers agree this should not be passed on to us because the technical losses are not our fault. Neither are the losses caused by illegal electricity connections. We should not be made to shoulder those costs,”he added.
Gatchalian echoed President Marcos Jr.’s call to remove the system loss from electricity bills during his 5th state of the nation address.
Gatchalian said many senators backed this proposal citing the eight bills that were filed in the upper chamber—all seeking to scrap the system loss charge.
Gatchalian initially estimated the cost of the system loss being passed on to consumers nationwide to be at about P70 billion to P80 billion.
But Energy Regulatory Commission Chairperson Saturnino Juan could not confirm this, though he noted that for Meralco alone, the system loss cost P30 billion in 2025.
Including electric cooperatives, Gatchalian then adjusted his estimated system loss at P45 billion.
“So, my question, who will absorb that 45? Again, I think that 45 can be absorbed by the distribution utilities. They just need to be efficient,” he further said, which netizens instantly aired their jubilation and consent to such a move.
Meralco has been operating a monopoly since its founding by Charles Swift in 1903 as the Manila Electric and Railroad Lighting Company. In 1961, a group of local investors led by entrepreneur Eugenio Lopez Sr. bought the company, marking the “Filipinization” of a major US enterprise.
Meralco became the country’s first billion-peso corporation in 1969, though operations were later disrupted and seized during the Marcos martial law era before the Lopez family was given back the company in 1986 by then President Corazon C. Aquino.
Today, Meralco holds the exclusive power distribution franchise across 39 cities and 72 municipalities, covering Metro Manila and surrounding industrial regions.
Eugenio Lopez Sr. put up the Meralco Securities Corp. in 1962 to acquire Meralco, making it a wholly Filipino owned company. During 1962-72, he increased Meralco’s power generating capacity by five times with the building of additional power stations in the Manila area with two more planned in Rizal province.
After declaring Martial Law in September 1972, President Marcos Sr. , who had been feuding with the Lópezes, issued Presidential Decree No. 40, nationalizing the country’s electric generation and transmission. A few weeks later, Marcos had Lopez’s son Eugenio “Geny” Lopez Jr. arrested without formal charges, claiming that the younger López had been involved in an alleged assassination attempt against him.
Geny’s arrest became a bargaining chip which eventually compelled the Lopezes to sell their controlling share of Meralco Securities Corporation to Marcos’ associates late in 1973. Ownership of Meralco Securities Corporation was placed under a newly created shell company called the Meralco Foundation Inc. controlled by Marcos’ brother-in-law Benjamin Romualdez who placed a down payment of about $1,500 for a “very minimal” total sale price of about $28 million (P200 million at the prevailing rate). Installment payments were supposed to be due starting two years later.
The Meralco Foundation takeover was immediately followed by a 100% increase in electric rates, with continuous increases throughout Romuáldez’s management. A rate adjustment clause, which allowed Meralco to adjust its rates depending on crude oil increases or higher dollar exchange rates, was also introduced.
In 1977, MSC was renamed First Philippine Holdings Corporation.By 1978, all of the Philippines’ major power plants were owned and operated by Napocor, including the Metro Manila plants that Meralco had built beforehand in the 1960s.
When Martial Law ended in 1981, Meralco expanded even further into Cavite and western parts of Laguna, Rizal and Quezon provinces and parts of southern Bulacan.
Meralco Foundation’s control of Meralco lasted until the EDSA People Power in February 1986 when it defaulted on its payments under the terms of the original turnover of shares in 1973, although it took a five-year period before the shares were eventually reverted to the Lópezes in 1991.
In 1990, Meralco acquired the electric facilities and other assets of the Communications and Electric Development Authority, one of two companies that distributed power in Cavite Province for much of the 1970s and 80s.
Between 2009 and 2012, the López Group reduced its 33.4% holdings in Meralco by selling most of its shares to Manuel V. Pangilinan of the First Pacific Group. By 2012, the López Group’s holdings in Meralco were down to 3.95%.
The First Pacific Group, through Metro Pacific Investments Corp., held the majority share in Meralco, followed by the Gokongwei Family’s JG Summit Group.
In 2014 and 2015, Meralco requested the 16th Congress to extend its franchise early although its renewal was not due until six years later, in 2020.
On April 11, 2025, President Marcos Jr. signed Republic Act No. 12146 which renewed Meralco’s franchise for another 25 years from its expiration in 2028.
In the lower house, Navotas Rep. Toby Tiangco refiled House Bill No. 10273, or the “System Loss Charges Abolition Act of 2026,” in support of the administration’s push to make electricity more affordable.
The proposal was first introduced in 2010 and subsequently refiled in 2013 and 2016, but has yet to gain traction in Congress. With Malacañang now backing the measure, Tiangco expressed optimism that it could finally be enacted.
Tiangco underscored the urgency of the measure, noting that electricity rates in the Philippines remain among the highest in the region.
If we are serious about lowering electricity costs, we must remove charges that are not the fault of consumers. This is a concrete step that will provide immediate relief to Filipino families in their monthly bills,” he added.
Tiangco also called on his colleagues to support what he described as a long-overdue consumer protection measure, emphasizing that existing policies allowing utilities to recover system losses have failed to adequately shield consumers from rising power costs.
The bill provides that electricity users would no longer shoulder costs stemming from technical losses, pilferage, and other inefficiencies in the power system.
Under Republic Act No. 9136, distribution utilities may recover an allowable portion of these losses from customers.