HOUSE Majority Leader Ferdinand Alexander “Sandro” A. Marcos has introduced House Bill (HB) No. 2700, seeking to provide free electricity to low-consumption households by replacing the current cross-subsidy system with a direct government subsidy.
The proposed “Free Electricity for Low-Consumption Households Act” aims to make power more affordable and equitable across the nation.
The bill proposes a Direct Government Subsidy to fully cover the electricity bills of qualified households within a defined monthly threshold. This subsidized amount would also be exempt from the 12% value-added tax (VAT).
“Electricity is a basic necessity of modern life,” Marcos stated. “This bill seeks to institutionalize a Direct Government Subsidy for low-consumption households, granting them free electricity within a reasonable monthly threshold and, eventually, phasing out the current system of cross-subsidization.”
An “Eligible Household” under the bill is defined as a residential consumer whose average monthly consumption over the preceding three months does not exceed 135 kilowatt-hours (kWh), or whose monthly bill does not exceed P2,000, whichever is lower. The Energy Regulatory Commission (ERC) and the Department of Energy (DOE) will provide certification.
Marcos pointed out 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 cited a December 2024 study by the Philippine Institute for Development Studies, which found that lifeline discounts vary per distribution utility (DU), leading to inequities where poor households in low-income areas can end up subsidizing other poor households. The study also noted that the 12% VAT on subsidized electricity effectively taxes both contributors and recipients.
The proposed bill aims to address these distortions by shifting to a direct government subsidy, removing the burden from other consumers, allowing transparent validation of eligible households, eliminating VAT on subsidized amounts, unifying implementation, and ensuring that public funds directly benefit eligible households.
Households exceeding the Monthly Consumption Threshold in a billing period will shoulder the entire bill for that month without subsidy. However, this temporary ineligibility will not automatically disqualify them from future benefits, provided they continue to meet the eligibility criteria.
Distribution utilities will issue zero-charge electricity bills to validated Eligible Households and submit verified reimbursement claims to the DOE, subject to audit by the Commission on Audit (CoA).
To prevent duplication and disruption, a two-year transition period is provided, during which the Direct Government Subsidy will coexist with the existing lifeline rate and other electricity subsidies. During this period, the DOE and ERC will review whether to fully replace the lifeline rate, allow both programs to coexist, or adopt other recommendations.
Marcos emphasized that the bill affirms electricity as a necessity that the State must make affordable and accessible. He also noted that most ASEAN countries already provide electricity subsidies, unlike the Philippines.
President Marcos has also announced simplified application processes for the Net-Metering Program, and that low-income and marginalized families now have easier access to electricity subsidies.
As of November 2025, only around 334,000 consumers are registered under the Lifeline Rate Subsidy Program (LRSP), which is only about 11 percent of the around three million beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps). Beneficiaries of 4Ps with monthly electricity consumption of 50 kilowatt-hour (kWh) or less will get 100 percent discount. Low-income families who are not covered by 4Ps but fall under the poverty threshold and with minimal electricity consumption may register with LRSP, said the President.
