The Institute of Integrated Electrical Engineers of the Philippines (IIEE) is urging policymakers to adopt engineering-based reforms on system loss charges, arguing that the ongoing review of the Electric Power Industry Reform Act (EPIRA) offers a critical opportunity to strengthen the power sector while safeguarding consumer interests.

EPIRA, enacted in 2001 as Republic Act No. 9136, restructured the Philippine electric power industry into separate generation, transmission, distribution, and supply sectors. System loss charges — the cost of electricity lost as it travels through power lines and equipment — are currently passed through to consumers, subject to caps set by the Energy Regulatory Commission (ERC). The ongoing congressional review of the law has reignited debate over whether those charges adequately reflect engineering realities versus utility inefficiencies.

In a position paper released Wednesday, the IIEE called on lawmakers to "adopt practical, evidence-based policies that protect consumers while supporting a safe, reliable, efficient and sustainable electric power industry."

Distinguishing Technical from Non-Technical Losses

The organization stressed that technical system losses are an unavoidable feature of electricity delivery and should not be conflated with avoidable operational inefficiencies. "Technical system losses are an inherent part of any electric power system and cannot be eliminated," the IIEE stated. "The engineering objective is to continuously reduce these losses through better system planning, upgrade and development, sound design, proper operation and effective maintenance."

While technical losses occur naturally as electricity moves through transmission and distribution networks, non-technical losses — including electricity theft, meter tampering, and billing inaccuracies — "impose unnecessary financial burdens on utilities and ultimately on law-abiding consumers," the group noted.

Engineering and Economic Principles Should Guide Recovery

The IIEE argued that any reform to system loss recovery mechanisms must clearly separate unavoidable engineering losses from avoidable inefficiencies, while balancing consumer protection, utility sustainability, and long-term grid modernization.

"Recoverable system losses should continue to be determined using established engineering parameters, including network configuration, load density, delivery voltage, conductor characteristics, transformer loading, customer mix as well as socio-economic conditions," the organization stated.

The group also pressed regulators to strengthen accountability through performance-based engineering regulation. "Recovery mechanisms should continue to encourage utilities to improve technical performance while ensuring accountability through measurable engineering and operational performance indicators," it said.

Investment and Equitable Transition

To enhance efficiency and reliability, the IIEE recommended sustained investment in "distribution automation, advanced metering infrastructure (AMI), smart grid technologies, voltage optimization and other engineering solutions."

The organization also highlighted the need for a fair transition, particularly for financially constrained electric cooperatives and distribution utilities (DUs). "IIEE recommends an equitable transition wherein any reform affecting system loss recovery should be accompanied by mechanisms that will enable financially constrained DUs to modernize their networks through appropriate financing, technical assistance, and performance-based investment programs," the group said.

The IIEE pledged its support for the reform process, adding that it "stands ready to work with the Congress, DOE, ERC, NEA, and other stakeholders in developing engineering-based recommendations for the continuing modernization of the Philippine electric power industry."