MANILA, Philippines – Manila Electric Company (Meralco) chairman Manny V. Pangilinan warned that the Philippine power industry “may not survive” if President Ferdinand Marcos Jr.’s order to remove system loss charges from consumers’ electricity bills is carried out in full.

Asked whether he would bow to the President’s order, Pangilinan did not exactly say yes. He said he wanted to talk to Marcos first.

“I think we should talk. We’re sympathetic. He’s under pressure too,” Pangilinan told reporters on Wednesday, July 29, referring to the spike in energy costs following the Iran war.

Pangilinan argued that Meralco’s distribution rate had been unchanged since July 2015, and that recent increases in electricity bills came from other parts of the power supply chain.

“The increase in the bill hasn’t come from us. Others have moved up,” he said in a mix of English and Filipino.

But Marcos’ directive could put Meralco and other utilities on the hook for system losses that consumers currently shoulder. And, according to Pangilinan, that could put them out of business. (READ: Meralco: Some system loss unavoidable, urges careful EPIRA reform)

“If we’re not allowed to charge, we have to absorb the losses coming from the system loss,” Pangilinan said.

“It’s a big bill for the industry,” he added, estimating that the cost could reach “tens of billions of pesos. We may not survive.”

The losses ‘will not disappear’

System loss is the difference between the electricity entering a power network and the amount eventually metered and billed to customers.

Some of it is technical and unavoidable: electricity encounters resistance as it travels through wires and transformers, causing part of the energy to be converted into heat.

But system loss also includes nontechnical losses such as electricity theft, illegal connections, and metering problems. The Department of Energy has said most nontechnical losses may be attributed to pilferage, although the breakdown varies across distribution utilities and electric cooperatives.

At present, consumers shoulder system losses within limits set by the Energy Regulatory Commission. Meralco estimates that system loss can account for about 5% of your monthly bill.

But in Marcos’ recent State of the Nation Address, the President said he wants consumers to stop paying the entire charge, including both technical and nontechnical losses and the value-added tax imposed on them.

“The whole system loss is what was the directive of the President na i-remove,” Energy Secretary Sharon Garin said a day later, confirming the order. “Hindi partial, hindi ‘yung nontechnical lang, kun’di ‘yung buo po (Not just partially, not just the nontechnical, but the whole thing), technical and nontechnical.”

Asked what his general take was on Marcos’ push to lower electricity rates, Pangilinan said Meralco was “one with the President.”

“But first, we have to address [what] are the causes of the sudden rise in electricity. But—” he said, before pausing for several seconds, “I’d better stop there.”

Later, the Meralco chairman would clarify that the problem lies partly in the law of physics.

“The system losses are still there. It’s not going to disappear. So, who’s going to pay for that?” Pangilinan said.

This will be the headache that the Congress and regulators will have to address: who among the generators, the transmission operator, the distribution utilities, or even the taxpayers will absorb the cost?

Meralco clashes with NGCP

Pangilinan also bristled at the suggestion that the National Grid Corporation of the Philippines (NGCP) does not have transmission losses. Any electricity delivered through wires will experience some energy loss, he argued. 

“Meron sila, it’s embedded in their generation. Hindi totoo na wala silang (It’s not true that they don’t have) transmission [cost],” he said, punctuating his rebuttal with a curse.

This was in reaction to a statement by the NGCP that the grid operator doesn’t directly bill Meralco for transmission technical system losses.

“NGCP does not charge or bill our customers, for example distribution utilities like Meralco, for system loss,” an NGCP representative told Rappler.

“We only charge for the delivery of power and for ancillary services, which is a pass-through charge and remitted entirely to ancillary service suppliers,” the representative added.

Meralco is not struggling today

Whatever the future impact of the reform, Meralco is hardly on life support right now.

The company’s gross revenue rose 16% to P283.7 billion in the first half of 2026, while reported income climbed 11% to P26.3 billion. Consolidated core net income reached P26.5 billion, up 3.8% from a year earlier.

The revenue figure does need a bit of context: a large portion reflects generation, transmission, and other charges that Meralco collects from customers and passes on to power suppliers and the grid operator, rather than income the company keeps. Meralco’s regulated distribution business accounts for only part of its total revenue, while its profits also come from power generation and other businesses.

The Energy Regulatory Commission is also set to decide soon, by August or September, on a possible rate reset that could raise Meralco’s distribution charge.

Still, coming from a group that earned a record P50.6 billion in core profit in 2025, Pangilinan’s warning is likely less of an immediate forecast of corporate collapse and more like an aggressive opening position in negotiations. – Rappler.com