The regulator wants a system loss charge within the allowable cap to be identified as a government-mandated charge not subject to VAT. System loss is the difference between the electric energy delivered to the distribution system and the energy delivered to the end-users. President Ferdinand R. Marcos, Jr. called for the removal of the system loss charge and its corresponding VAT to ease the burden on consumers. Once the resolution is finalized and confirmed by the BIR, VAT on the system loss charge will effectively be removed, delivering immediate relief to households. Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the ERC’s proposal to eliminate VAT on system loss charge is “a sensible and consumer-friendly reform.”