LEGAZPI CITY --- Electric consumers would be unburdened with extra costs for power systems loss and Value Added Tax (VAT) once Congress passes two bills setting a cap on systems losses and removing EVAT on such system losses that electric coops normally pass to their consumers.

         House Bills (HB) 4838 and 4839 authored by Albay Rep. Al Francis Bichara seek to amend Sec. 43 of R.A. 9136 or the “Electric Power Industry Reform Act of 2001” and Sec. 108 of the National Internal Revenue Code, respectively.

         The two bills have been submitted to the House Energy Committee for deliberation and endorsement.

        Bichara said the proposed bills are now at the committee level. He is optimistic that these measures would be supported by his colleagues in Congress since they would be beneficial to all, including the business sector.

        Bichara said HB 4838 seeks to set limit on the cap on systems losses which the Energy Regulatory Commission (ERC) may impose, in order to minimize the effects of increasing electricity costs which have already reached monumental heights.

        The bill once passed would stop the unfair practice of power distribution utilities in passing administrative losses, including “own use” charges to electric consumers, the Bicol solon pointed out.

         Bichara said “it is so unfair for power consumers to pay for something that the power utilities should have absorbed because of their inefficient operations.”

         One of the main reasons for high electricity costs is the “systems loss” component which the power distribution utilities pass on to their consumers.

         Under the present law, the ERC is given a free hand to determine the cap for recoverable systems losses; however, until today the ERC has not yet issued a regulation setting the new caps, thus the high percentage of recoverable rate has caused tremendous increase in electric costs.

         The cap provided for under the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act imposes a recoverable rate of 9.5 percent for private electric utilities, and 14 percent for rural electric cooperatives.

        For this reason, irate consumers who are burdened by such system losses deem it unfair for power utilities to charge them with losses which the power utilities should absorb as part of doing business.

         “Remove administrative losses, including ‘own use’ charges of power distributors, from the definition of systems losses and we can see an enormous relief from our electric consumers,” said Bichara.

        HB 4839 seeks to amend Section 108 of the National Internal Revenue Code, by removing the collection of VAT on systems loss that is passed on consumers.

        Bichara, vice chair of the House Energy Committee, stressed that charging of EVAT on systems loss is “unconscionable” since systems loss is a loss which arises from technical inefficiency and thus should not be considered a VATable item because it does not form any part of electricity actually consumed.