Manila: House Majority Leader Ferdinand Alexander 'Sandro' Marcos is advocating for a legislative measure that seeks to provide free electricity to low-consumption households, replacing the current cross-subsidy system with a direct government subsidy to enhance affordability and equity in power distribution across the nation.
According to Philippines News Agency, House Bill No. 2700, known as the proposed Free Electricity for Low-Consumption Households Act, aims to establish a direct government subsidy that will fully cover the electricity bills of eligible households within a specified monthly threshold. The bill also proposes exempting the subsidized portion from the 12 percent value-added tax (VAT).
The proposed measure defines eligible households as those residential consumers whose average monthly consumption over the preceding three months does not exceed 135 kilowatt-hours (kWh), or whose monthly bill does not exceed PHP2,000, depending on which is lower. This eligibility is subject to certification by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE).
Marcos highlighted that the current system of electricity subsidies, which includes the lifeline rate for indigent consumers and the senior citizen discount, relies on cross-subsidies where other consumers bear the cost. He referenced a December 2024 study by the Philippine Institute for Development Studies, which indicated variability in lifeline discounts across distribution utilities (DUs) due to differences in financial capacities and customer characteristics.
The proposed HB 2700 seeks to transition from cross-subsidization to a direct government subsidy to address existing distortions and relieve other consumers from this financial burden. The measure is designed to ensure transparent validation and exclusion of ineligible households, eliminate VAT on subsidized amounts, unify implementation, and direct public funds to benefit eligible households directly.
Households that exceed the consumption threshold in any billing period will be responsible for their entire bill for that month without subsidy. However, this temporary ineligibility will not disqualify them from future benefits, provided they continue to meet the eligibility criteria.
The bill also requires distribution utilities to issue zero-charge electricity bills to validated eligible households and submit verified reimbursement claims to the DOE. These claims will be subject to strict audits by the Commission on Audit to prevent leakage and ensure accountability.
To facilitate a smooth transition, the bill includes a two-year period during which the direct government subsidy will operate alongside the existing lifeline rate and other electricity subsidies. During this time, the DOE and ERC, in collaboration with other agencies, will determine whether to fully replace the lifeline rate, allow both programs to coexist with distinct beneficiary scopes, or consider other recommendations.
"In enacting this measure, Congress affirms that electricity is a necessity which the State must make affordable and accessible," Marcos stated.
