Ever wonder where every peso of your electricity payment goes? Under the Electric Power Industry Reform Act (EPIRA), utility companies use "unbundled" billing. This means your bill is broken down into distinct charge components so you can see exactly what you are paying for.

Your monthly bill is divided into four major components:

1.  

   Generation & Transmission Charges

2.  

   Distribution Charges

3.  

   Subsidies & Other Charges

4.  

   Government Charges & Taxes

1. Generation & Transmission Charges

These are pass-through charges. This means the distribution utility merely collects these payments and passes them directly to the power generation companies and the grid operator.

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  Generation Charge: The actual cost of producing electricity. This covers what the utility pays to power suppliers (such as thermal or hydro plants), the Wholesale Electricity Spot Market (WESM), and independent producers.

•  

  Transmission Charge: The cost of moving bulk electricity across the high-voltage "interstate highway" from power plants to your local area. This fee goes directly to the grid operator (e.g., the National Grid Corporation of the Philippines or NGCP).

•  

  System Loss Charge: This recovers the cost of electricity lost during power delivery due to technical limits (like heat in wires) and non-technical issues (like electricity theft). It is strictly capped and regulated by the Energy Regulatory Commission (ERC).

2. Distribution Charges

This is the only section of the bill that goes toward funding your local electricity provider's business operations.

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  Distribution Charge: The cost of building, operating, and maintaining the neighborhood grid infrastructure—including power lines, poles, and local substations—that brings electricity directly to your door.

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  Supply Charge: Covers the operational costs of retail customer service, including billing, statement printing, and managing customer accounts.

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  Metering Charge: The cost associated with reading, inspecting, and maintaining your physical electricity meter.

3. Subsidies & Other Charges

These are special adjustments, social programs, or external funds mandated or approved by the regulatory commission.

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  Lifeline Rate Subsidy: A small, fixed charge collected from standard consumers to fund discounts for low-income, marginalized end-users who consume very little electricity each month.

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  Senior Citizen Subsidy: A small fee allocated to provide mandated billing discounts to verified senior citizen households.

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  Universal Charge: A consolidated fee passed on to specific government corporations (like PSALM) for broad industry mandates, such as the Missionary Electrification fund used to power far-flung, off-grid islands.

4. Government Charges & Taxes

By law, utility companies are required to collect statutory taxes on behalf of national and local governments.

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  Value Added Tax (VAT): A national consumption tax applied to the different sectors of your bill (Generation, Transmission, and Distribution).

•  

  Local Franchise Tax: A tax imposed by the local government unit (LGU) for the privilege of operating electrical systems within city or municipal streets.

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