blog image
  • By : Delmar O. Cariño
  • Jul 06, 2020


Misunderstanding the rates

The rate scheme for electric cooperatives is not an ordinary conversation and it requires more than a bucket to fully grsp its mechanics.

This corner understands knee jerks over a news headline that screams about increase in power rates. But soliciting a chorus to rabidly denounce it and secure public sympathy for a petition is just spewing tirades shot from the hip. Not that the act is condemnable. That's part of democracy. What is askew is an outcry that grew out of simple ignorance.

Please ask first. Had one arrived in such gesture, then matters would have been clarified. BENECO is most willing to answer your queries. We have a 24/7 consumer welfare office manned by vibrant millennials who are ready to take your calls. We have a community relations office manned by battle tested community organizers who could dispatched for any contingency for an IEC. A pitch with any of them would have made the sunshine amid our times still reeling from the pandemic.

Good Mayor Benjamin Magalong had his senses. A blue chip executive indeed. He bluntly asked Engr. Melchor Licoben, our general manager, if the there is an increase in electricity rates this June. Without batting an eyelash, the GM said none. In a letter sent to the local chief executive on July 3, the GM painstakingly expounded on how power rates come about. The GM categorically declared that the electric cooperative (EC) has neither filed any petition nor intends to file any application for a rate increase before the Energy Regulatory Commission (ERC).

Ditto with Malou Laxamana Pascual. She said the power increase is no laughing matter that's why the EC's side must be asked. And sure she did. There is indeed an increase but not due to BENECO's fault. It's not actually an increase per se but an adjustment as per industry lingo, no thanks to the quirks of how rates are computed following the state's prescription.

Ergo one should not rush to judgment when my friend Dexter See headlined in the Manila Times that BENECO's power rates are up in June. To reiterate, the news sounded that way but a probing tap or two would have surely set the record straight – that the spike was due to the increase in the transmission cost and the resumption in the collection of the Feed In Tariff Allowance (FIT-All).

Spread right now in this website and our facebook page which could be a source of brief education is the breakdown of the components of the electricity rates which all ECs nationwide bill their consumers every month. That's why power bills are long because the EPIRA or Republic Act 9136 require that these components must be enumerated one by one, or to be unbundled.

The unbundling would make us understand what "Pass Through" and "Pass On" charges are.

The "Pass Through" charges are those charges which the EC collect from consumers and remit to the appropriate body or government agency - generation charge for the power supplier; transmission charge for the transmission company (National Grid Corporation of the Phi./NGCP); universal charges for the Power Sector Asset Liability and Management Corporation (PSALM); and value added tax for the Bureau of Internal Revenue (BIR).

The "Pass On" charges refer to the charges which the electric cooperative (EC) collect from consumers and retain for its coffers to finance their operations, fund their capital expenditures and pay the salary of their employees. These charges are called distribution, supply and metering (DSM) charges and the reinvestment fund for sustainable capital expenditure (RFSC).

The DSM are fixed charges. BENECO can't just increase the same without the ERC's tacit approval. To do so would be under pain of law. BENECO's DSM and RFSC rates are P.99 per kWh at the average and P0.2178, respectively, for many years already.

But the generation and transmission charges dance a lot. The generation charge is affected by foreign exchange rate, cost of coal and fuel and exposure in the Wholesale Electricity Sport Market (WESM). Any spike in such prices would naturally result to an adjustment in the charges the EC will pass to the consumers. The same holds through with the transmission charge. The charge sways from period to period since it has to contend too with changes in the power delivery service charge and ancillary services for the regulating, contingency and dispatchable reserves and reactive power support services.

As we stated earlier, the upward adjustment in June was brought about by the transmission charge and the resumption of the Feed in Tariff (FIT). The ERC stopped the collection of the FIT in April due to the pandemic but ordered it to be collected anew in June.

Of course, these intricacies of the rates cannot be digested overnight. That's why we will always accommodate searching queries on these matters. One should not attempt to whip a storm if you haven't swam the river yet.