The Energy Regulatory Commission (ERC) has issued a draft resolution seeking to exclude the system loss charge from the value-added tax (VAT) base of generation companies, distribution utilities, and the National Grid Corp. of the Philippines. System loss represents the difference between electricity delivered to the distribution system and what reaches end-users, with costs currently passed to consumers. The ERC argues that imposing VAT on electricity that was never actually delivered contradicts the fundamental nature of VAT as a tax on goods and services rendered.