System Loss FAQs
1. Why is Meralco charging me for System Loss and what is this for?
System loss is a natural and unavoidable effect of delivering electricity to end-users. As electricity travels from power plants through the transmission and distribution network to homes and businesses, a small amount of energy is naturally lost due to technical reasons, while some losses also result from non-technical factors such as electricity theft and illegal connections.
Because electricity is procured based on the total customer demand including the energy that is naturally lost during delivery, the cost of system loss is already part of the electricity purchased from power generation companies and transmitted through the grid. As such, the System Loss Charge is a government-approved pass-through charge that allows distribution utilities to recover the cost of these allowable losses. It is not a separate service or an additional charge imposed by Meralco.
The cost of system loss forms part of the generation and transmission costs paid to power generation companies and the National Grid Corporation of the Philippines (NGCP). Meralco serves only as a collecting agent for this pass-through charge and does not earn from it. This mechanism is implemented by all distribution utilities and electric cooperatives nationwide.
To protect customers, the Energy Regulatory Commission (ERC) regulates how much system loss may be recovered. Under the ERC rules, distribution utilities may recover actual subtransmission/substation (ST/SS) losses and feeder losses, with only feeder losses capped at 5.5%. Any system loss beyond the ERC-approved recoverable level is absorbed by the concerned distribution utility, including Meralco, and cannot be charged to customers.
Although some level of system loss is unavoidable, Meralco continues to invest in grid modernization, Advanced Metering Infrastructure (AMI), and anti-electricity theft initiatives to further reduce system loss and improve the efficiency and reliability of electricity delivery.
2. Why is there System Loss?
Because electricity travels a long distance from generation plants before reaching our homes and businesses, a portion of it is naturally lost along the way and cannot be used.
System loss occurs due to technical factors, such as:
- Heat generated as electricity flows through power lines
- Energy lost as electricity passes through transformers that convert high voltage to lower, safer levels for customers
- Voltage fluctuations or instability within the power system
There are also non-technical losses caused by illegal connections and electricity pilferage.
The Energy Regulatory Commission (ERC) sets a cap on the amount of system loss that may be charged to customers. Only losses within this allowable limit are shared among customers. Any amount exceeding the cap is shouldered by distribution utilities such as Meralco and is not passed on to customers.
3. Why are you charging me for losses due to electricity theft or illegal connections? Why don’t you charge it to the power pilferers?
We understand your frustration. Meralco does not tolerate electricity theft. Illegal connections are disconnected, and power pilferers may face legal action under the law.
Recovery of the non-technical loss is allowed under the current rules/laws as the allowable system loss considers both technical and non-technical losses. This approach is consistent with standard global practice for electricity distribution systems as non-technical losses are highly affected by socio-economic factors.
The law/regulations also sets system loss caps so that only reasonable cost of losses are to be included in electricity rates. Only the allowable level of system loss may be recovered from customers, while any losses beyond the ERC-approved recoverable level are absorbed by the distribution utility.
In addition, any amount recovered from power pilferers is returned to customers through a reduction in generation charges.
In 2025, Meralco’s actual system loss was only 5.85%, which is below the ERC limit.
4. Is system loss unique to Meralco?
No. System loss is not unique to Meralco or the local power industry. It is a common operational aspect of utility distribution, including water services, where some volume may be lost during delivery. In the Philippines, the system loss charge for electricity is implemented by distribution utilities and electric cooperatives nationwide, subject to government regulation.
All businesses experience losses and account for these in their pricing. For example, supermarkets account for spoiled/rotten fruits and vegetables, damaged goods due to handling and theft by customers. These losses are all part of business operations and included in the overall pricing in the supermarket. The goal of all businesses is to reduce them but you can’t totally eliminate them.
The difference with Meralco and other distribution utilities is that ERC mandates to explicitly show how much of customer charges is related to system loss to increase transparency.
5. Is the Philippines the only country that charges for system loss?
No. All countries recognize system losses as part of operating an electricity network. The difference is how these costs are shown and regulated. In some countries, they are included in network or distribution charges, while in others, they may appear separately.
In the Philippines, system loss appears as a separate line item in the monthly electricity bill to provide customers with greater transparency on what they are paying for. The ERC limits the amount that may be recovered from customers. For private distribution utilities like Meralco, the maximum is the actual ST/SS loss typically at 1-2% and feeder loss capped at 5.5%. Any losses beyond this limit are absorbed by the distribution utility.
In 2025, Meralco’s actual system loss was 5.85%, which is below the ERC’s allowable limit.
6. Is system loss affected by seasonal weather?
System loss is influenced by the level of electricity consumption. Generally, the higher the electricity consumption, like during summer season, the higher the losses incurred by the electric power system.
7. What is Meralco’s response to PBBM’s 2026 SONA and System Loss?
Meralco supports the government’s efforts to reduce system loss and continuously invests in initiatives that improve the efficiency, reliability, and integrity of the power distribution system.
One of these key initiatives is the rollout of the Advanced Metering Infrastructure (AMI) program. AMI enables near real-time monitoring of electricity consumption and the distribution network, helping detect meter irregularities, unauthorized connections, and other potential sources of non-technical losses more quickly. It also improves operational efficiency, meter reading accuracy, and outage response, ultimately benefiting customers.
In addition to AMI, Meralco continues to modernize and upgrade its distribution facilities to reduce technical losses and enhance service reliability. Meralco remains committed to implementing technologies and programs that help minimize system loss while ensuring that only the allowable level of system loss, as prescribed by regulations, is recoverable from customers.
8. What is Meralco doing to reduce system loss?
Meralco continues to invest in facility upgrades, network modernization, and loss-reducing technologies. Public reports after the 2026 SONA also noted that Meralco has kept its system loss below the ERC ceiling.
9. How has Meralco’s system loss improved over time?
Meralco has significantly reduced system loss over the years—from above 10% in the early 2000s to 5.99% in 2024 and 5.85% in 2025. In the first half of 2026, system loss stood at 6.07%, remaining below the ERC’s allowable limit of 5.5% feeder loss plus actual subtransmission and substation losses.
These sustained improvements have benefited customers through lower system loss charges.
10. How does Meralco compare with other Distribution Utilities in the Philippines?
Meralco’s system loss is lower than many other distribution utilities in the Philippines.
In 2024, Meralco recorded 5.99% system loss, which was further reduced to 5.85% in 2025.
This means Meralco continues to perform within the better range locally, while still working to further reduce system loss through inspections, anti-pilferage efforts, and meter-related programs.
11. How does Meralco compare with international Distribution Utilities?
System loss is not unique to Meralco. It is present in electric utilities in other countries because some energy is naturally lost when electricity travels through wires, transformers, and other equipment before reaching customers.
Based on available benchmarks, Meralco’s system loss is within the range of several utilities in the region. Meralco recorded 5.99% system loss in 2024, which is close to Vietnam’s EVN and Malaysia’s TNB at ~6%.
Some utilities have lower system loss, such as Singapore and Thailand, but these systems may differ from Meralco in terms of size, customer mix, network design, service area, and reporting method. Some international figures may also include transmission loss, so comparisons should be taken as general benchmarks, not exact one-to-one comparisons.
The main point is: system loss happens in electric utilities worldwide, and Meralco continues to manage and reduce it while staying within regulatory limits.
12. What are elevated metering infrastructures and how do they relate to system loss?
Elevated Metering Centers (EMCs) are used in areas where there is a high risk or incidence of electricity pilferage. This is not unique to Meralco. Other distribution utilities in the Philippines also implement similar measures to help protect their electricity networks from illegal connections and meter tampering.
More importantly, EMCs help protect the community. Illegal connections and unauthorized access to power lines can create serious electrical and fire hazards, putting both customers and surrounding communities at risk.
Meralco is also continuously improving its metering technology through EMX, a newer solution designed to be more lightweight and secure, while continuing to help deter electricity pilferage and promote safer communities.
13. How can I report incidents of electricity pilferage to Meralco?
You may report electricity pilferage anonymously via Meralco’s 24/7 hotline and social media channels.
These include illegal “jumpers”, tampered meters, unauthorized / “flying connections”, and theft of wires/cables and other grid infrastructure.