Iza Aldana
Sep 9, 2026
Technical losses are inherent; further cuts must be cost-effective and benefit consumers.
Meralco is pushing for a practical approach to reducing electricity system losses, stressing that some losses are inherent to the operation of a power distribution network and cannot be completely eliminated.
Larry Fernandez, Meralco’s Head of Utility Economics, said the company is participating in the ongoing Technical Working Group discussions on proposed measures to further reduce system losses. The group is reviewing the bills following initial congressional hearings, with inputs from the Department of Energy (DOE) and Energy Regulatory Commission (ERC) still being considered.
Fernandez noted that Meralco has already significantly reduced its system losses over the years. From more than 20% in the 1980s, the company’s system loss has fallen to below 5%.
Meralco distinguishes between technical and non-technical losses. Technical losses occur naturally as electricity passes through wires, transformers and other equipment, while non-technical losses include electricity pilferage and illegal connections.
Fernandez emphasized that the company supports further reductions but said the measures must make economic sense for consumers.
“What we want is that the savings that will go to the customer in reducing system loss will be more than the cost that we will need to incur to bring down that loss.”
He also stressed that Meralco is a distribution utility, not a power generator. The company operates the distribution network of cables and transformers that connects customers to the transmission grid.
“System loss is just a by-product of the operation of the distribution system.”
According to Fernandez, completely eliminating system losses is not realistic, noting that even developed countries continue to record some level of technical and non-technical losses.
For Meralco, the goal is therefore to minimize losses through cost-effective measures, while maintaining reliable service and ensuring that any resulting savings ultimately benefit electricity consumers.
The company said it will continue to follow the rules and standards set by the ERC as discussions on further reductions in the system-loss cap move forward.