Free Electricity Plan Targets Households Using 135 kWh Or Less
- February 20, 2026
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Free electricity may soon become a reality for low-consumption households as House Majority Leader and Ilocos Norte 1st District Rep. Ferdinand Alexander “Sandro” Marcos has filed a bill proposing a direct government subsidy to replace the current cross-subsidy system embedded in existing power rates.
House Bill No. 2700, or the proposed Free Electricity for Low-Consumption Households Act, aims to institutionalize a Direct Government Subsidy that would fully cover electricity bills of qualified residential consumers within a defined monthly threshold, while exempting the subsidized portion from the 12 percent value-added tax (VAT).
Eligibility And Coverage
Under the proposal, an eligible household is defined as a residential consumer whose average monthly electricity 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. Eligibility would be subject to certification by the Energy Regulatory Commission (ERC) and the Department of Energy (DOE).
If enacted, qualified households would receive zero-charge electricity bills for covered consumption. Distribution utilities (DUs) would issue the bills and later submit verified reimbursement claims to the DOE. These claims would be subject to audit by the Commission on Audit (COA) to ensure accountability and prevent leakages.
The bill provides that if a household exceeds the monthly threshold in a given billing period, it must shoulder the entire electricity bill for that month without subsidy. However, temporary ineligibility would not automatically disqualify the household from availing of benefits in subsequent periods, provided it continues to meet the criteria.
“All Eligible Households, whose consumption does not exceed the Monthly Consumption Threshold, shall be covered by the Direct Government Subsidy,” the bill states. It adds that exceeding the limit for a particular month will require full payment for that period but “shall not, by itself, disqualify the household from availing of the benefits under this Act in subsequent billing periods.”
Shift From Cross-Subsidies
Marcos described electricity as a “basic necessity of modern life,” saying the bill seeks to shift away from the current cross-subsidy mechanism used in the lifeline rate for indigent consumers and the senior citizen discount.
“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,” Marcos said.
Under the existing setup, subsidies are funded through charges imposed on other electricity consumers. Marcos said that while the system is “unquestionably noble in intent,” it results in distortions and uneven implementation.
He cited a December 2024 study by the state-run Philippine Institute for Development Studies (PIDS), led by research fellow Dr. Kris A. Francisco, which found that lifeline discounts vary per distribution utility due to differing financial capacities and customer profiles. The study also noted that under DU-level cross-subsidies, poor households in low-income areas can end up subsidizing other poor households. In addition, subsidized electricity remains subject to a 12 percent VAT, “effectively taxing both contributors and recipients.”
Marcos said the proposed measure would address these distortions, remove the burden on other consumers, eliminate VAT on subsidized amounts, and ensure that public funds directly benefit eligible households through a unified and transparent system.
Transition Period
To prevent disruption, the bill provides for a two-year transition period during which the proposed Direct Government Subsidy would coexist with the existing lifeline rate and other electricity subsidies.
During this period, the DOE and ERC, in coordination with other relevant agencies, would review whether to fully replace the lifeline rate, allow both programs to operate with separate beneficiary scopes, or adopt other policy recommendations.
“In enacting this measure, Congress affirms that electricity is a necessity which the State must make affordable and accessible,” Marcos said.
ASEAN Trend
“It is a known fact that, with the exception of the Philippines, ASEAN countries are already providing electricity subsidies in varying degrees,” Marcos said, adding that a direct subsidy scheme is needed “in order to bring better relief to low-income households than that afforded by the existing lifeline rate under the EPIRA (Electric Power Industry Reform Act of 2001).”
Government records cited in the proposal show that as of November 2025, the Lifeline Rate Subsidy Program covers around 334,000 consumers, equivalent to about 11 percent of the roughly three million beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps).
High electricity costs have long been a concern for both households and businesses. Separate proposals in the House have sought to address related issues, including measures to prevent utilities from passing on system loss charges to consumers.
Marcos called for the immediate passage of House Bill No. 2700, framing it as part of broader efforts to make electricity more affordable for low-income and marginalized families.
Source:
https://www.gmanetwork.com/news/topstories/nation/976849/electricity-households-bill/story
